Japan's rubber industry is beginning to recover
Japan's rubber companies, which suffered heavy losses in the financial crisis, have finally seen the dawn of recovery, and the Japan rubber industry association has called 2010 a year for the industry to ride out the crisis and embrace the recovery. But it will take time for the rubber industry to fully recover, as Japan's domestic economy continues to sputter.
Due to the impact of the world financial crisis, the domestic demand for tires in Japan dropped from 128 million (down 4% year on year) to 102 million in 2009, down 20%. Production fell 24.7% from 182 million pieces (down 2.1% year on year) to 137 million pieces, back to production levels of 20 years ago. In other rubber products, tape production decreased by 24%, hose production decreased by 35.3%, and product production decreased by 37.1%. The amount of rubber used in the rubber industry was reduced from 1.64 million tons to 1.2 million tons, a decrease of 26.8 percent.
The Japan rubber industry association forecasts Japanese demand for 109m tyres this year, up 6.8% from a year earlier. There were 82.01 million passenger tires, 16.75 million light truck tires and 4.95 million truck tires, up 8.0%, 3.8% and 6.7% respectively. Tire production is expected to be 147 million, up 6.8%. The tape of non-tire rubber products increased by 3.4%, the hose by 20.4% and the products by 9.4%. The amount of rubber used in industry has recovered to 1.28 million tons, and the national consumption of rubber (including non-rubber rubber used in industry) will reach 1.6 million tons.
Two of the world's four largest companies are in Japan, accounting for 40% to 50% of the world's total production capacity. 2010 will be a year when the industry starts to grow rapidly from recovery production. Bridgestone invested 28.5 billion yen in the construction of a new large engineering tire plant in Kitakyushu, Japan. This is bridgestone's first giant engineering tyre plant in Japan since 1976. Because the market is in short supply, bridgestone decided to invest another 29.5 billion yen to start construction of the second phase of the project, which will have a daily consumption capacity of 80 tons by 2012. In addition, yokohama rubber's otsudo engineering tire plant began the fourth phase expansion after completing the third phase expansion. The production of Japanese engineering tires is expected to increase significantly in 2010.
Multinational rubber conglomerates will be the first to recover as their performance has generally declined less than the average Japanese company.
Still, the Japanese auto industry, which accounts for 70 percent of demand for rubber products, is still struggling to recover, falling 31.5 percent to about 7.93 million units in 2009 from 11.57 million the previous year, the first time it has fallen below 8 million units in 31 years. The market is expected to remain depressed in 2010 and may not fully recover until 2014. This had a great impact on the production of Japanese rubber industry.
Due to the sluggish domestic economy in Japan, without special measures to pull the rubber industry to achieve the expected target of 2010 is quite difficult. Even a 6.8 per cent increase in tyre demand would be equivalent to production levels in the late 1980s and still far short of the record consumption of 2.049 million tonnes reached in 2007.