The Covid-19 pandemic and the rubber industry | Daily News


 

The Covid-19 pandemic and the rubber industry

 A rubber plantation
A rubber plantation

The Covid-19 pandemic has engulfed the world and stopped it in one place. Giants of the global economy are facing many difficulties in controlling the pandemic while nearly 400,000 people have died throughout the world. Terms such as self-quarantine, social distancing, and lockdown have come to the routine vocabulary in every nation. Scientists and researchers are searching for various possible solutions to control Covid-19. Medicine, health care, food, fuel supply, and security have become essential services while all the other economic sectors such as industries were closed all over the world. However, manufacturing operations that produce medicine, food, other products required for medical and agriculture sectors such as gloves, health care equipment, tires, and fuel have to be operated while adhering to Covid-19 guidelines.

Under such a situation, the rubber industry has a major role to play since this elastomeric material facilitates numerous needs of humans from their birth. For example, rubber fulfills needs such as comfort, safety, transportation, sealing, soundproofing, vibration resistance, health care and medical, etc. Therefore, rubber is bound with human activities and it has become an essential material in our lives. Even during the Covid-19 pandemic, the rubber material has come closer to human lives through medical gloves, boots, surgical articles, masks, and other medical tools to save us from the pandemic.

Rubber sap

The Rubber & Plastics News journal says that the Covid-19 pandemic is having an unprecedented impact on the global rubber industry due to lockdowns, movement control, social distancing, and widespread closures implemented by governments across the world. Though the above situations are true, supplying of rubber products to medical and agriculture sectors is vital during the pandemic to save the lives and retain a secure food supply. But adhering to the guidelines on COVID-19 is more important when the industries restart their production operations.

Plastic and rubber products market

However, in 2019, the Asia Pacific and North American regions accounted for 40% and 27% of market share respectively while the African region accounted for the smallest market share in the global plastic and rubber products market. The Association of Natural Rubber Producing Countries (ANRPC) says that the global plastics and rubber products market is expected to decline from US$ 1378.6 billion in 2019 to US$ 1345.4 billion in 2020 at a compound annual growth rate (CAGR) of -2.5% due to economic stoppage across countries owing to the COVID-19 outbreak. Also, they predict that the market will recover at a CAGR of 8% from 2021 and will reach US$ 1633.9 billion in 2023. Further, the ANRPC had noted a more severe impact from the Covid-19 in April 2020 due to implemented lockdowns and had lowered their projections of world rubber consumption in 2020.

Gloves made of rubber

Nevertheless, with the effect of the Covid-19 pandemic, medical gloves have shown the highest demand among the rubber products because it is extensively used in the medical industry at the moment. But according to global rubber statistics, it is not enough to balance the drop in demand and consumption from the automotive and tire industries.

In summary, these figures indicate that there is a massive impact on the rubber industry from the Covid-19 outbreak and it indirectly denotes the need for restarting production operations with strong health policies, regulations, and guidelines.

According to the Sri Lankan context, we normally export different types of natural and synthetic rubber-based products, especially medical and other types of gloves while being the largest exporter of solid rubber tires in the world. In the year 2019, Sri Lanka exported rubber and rubber products worth about US$ 900 million. According to the Central Bank Report 2019, Sri Lanka has produced 82 million kilograms of raw rubber in 2018. Though local consumption of natural rubber amounted to 58.6 million kilograms, Sri Lanka has exported natural rubber and rubber products worth Rs.5,088 million to many countries all over the world including the European Union. These figures will be different this year due to the effect of the pandemic. But the reopening of the rubber industry with a strong monitoring process will be a better solution to create a stable economy during 2020.

Agriculture-related rubber products

The demand for agriculture-related rubber products such as agricultural tires, household gloves, boots, and other products will remain as the government spurs the community for large-scale rice, vegetable, fruit production, and household farming practices. Also, the food and food security have become an important discussion at the moment; therefore, the agriculture tires and related rubber products will see a surge in demand in the near future. But the demand for industrial tires and related rubber products will show a lesser demand until the construction industries restart.

Although, the price of rubber products has not shown a dramatic decline in the period of the pandemic, the raw rubber prices have fallen because it follows the price of petroleum, which is used to derive synthetic polymers. Thus, it indirectly stipulates that the small and medium scale rubber growers, raw rubber (crepe rubber, ribbed smoked sheet rubber, concentrated latex, and technically specified rubber) manufacturers can be affected by the decline of raw rubber prices. Further, the harvesting of rubber can stop and farmers can be affected when production is paused by the rubber manufacturers. Also, the recession of rubber exports can affect the fortunes of a large number of small and medium scale entrepreneurs (SMEs) in the supply chain of the rubber industry, and shutting down the operations of rubber products manufacturing companies can affect the day-to-day wage payees of the sector.

The tire industry is 100% dependent on rubber

Therefore, making the rubber industry an essential service during the Covid-19 pandemic is important as the rubber industry supplied rubber products to the medical industry and the agriculture sector in the world. The relevant authorities should be responsible for re-structuring the sector through a sustainable policy as soon as possible before the economy takes a serious downturn.

In consideration of these problematic conditions, permission has been given to restart the factories strongly aligning with the guidelines on Covid-19 provided by the health sector of Sri Lanka. Now the factories are operating between 10 to 50 percent of capacity from April 2020 showing a surge in demand. Also, the rubber auction had been held in April 2020 adhering to the guidelines on COVID-19 and about 300,000 kilograms of raw rubber had been auctioned. Latex crepe rubber (Grade 1X) had been traded at the highest price of Rs. 350.00 whereas RSS grades which are used for tire manufacturing were not even quoted. However, latex crepe rubber (1X grade) which is used to manufacture rubber products to medical, food, and pharmaceutical industries has shown the highest demand because they have become special needs of the global community. Moreover, this will be an added advantage for SMEs for fulfilling their financial needs, and the reopening of the rubber industry will cater to the overall economy of Sri Lanka. Overall, we can keep high hopes for local and international demand for the Sri Lankan rubber industry as the pandemic condition in Sri Lanka has been controlled with the strong intervention of the Government and other interrelated authorities.

(The writer is a Lecturer at the Department of Export Agriculture, Faculty of Animal Science and Export Agriculture, Uva Wellassa University of Sri Lanka, Badulla)


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