With Widespread Industrial Applications, Falling Industrial Output Erodes 41,000 Metric Tons of Chloroprene Rubber Consumption Worldwide
Impacted by the repercussions of plummeting manufacturing PMI & declining industrial output, global market for Chloroprene Rubber is expected to lose over 41,000metric tons in consumption in the year 2020 and thereafter recover to reach 337,427 metric tons by the year 2027 trailing a post COVID-19 CAGR of 3.7% over the analysis period 2020 to 2027. Chloroprene rubber finds widespread use in the manufacture of gaskets, cable jackets, tubing, seals, O-rings, tire-sidewalls, gasoline hoses, weather-resistant products, orthopedic braces, adhesives, electrical insulations and coatings. Division of labor, modular manufacturing strategies, outsourcing to reduce costs and increase the efficiency, consistency, and quality of each operations, have made the manufacturing sector most vulnerable amid the lockdown restrictions. An indication of the grim state of affairs is the fact that global manufacturing PMI is already declining and will fall to an estimated all-time low in 2020 as compared to the 53.8 in 2019. With roots in China, the world's supply chains are facing unprecedented disruption and shutdown. Interwoven with a demand crisis, the supply chain shocks are exerting a compounded blow to manufacturing companies worldwide. A combination of all the aforementioned macro-economic issues alongside more specific factors such as suspension of the transportation and changes in demand patterns have dealt a debilitating blow to the manufacturing industry. On a monthly basis, global manufacturing PMI continuously degraded from 52.2 points in January 2020 to 39.6 points in April 2020 and 42.4 points in May 2020. This indicates severe contraction of manufacturing activity including new orders, production, employment, supplier deliveries, inventories, customers' inventories, commodity prices, order backlog, new export orders, and imports. Business investment confidence is tumbling amidst poor demand, falling profits, liquidity crunch and a reeling global economy. The "great lockdown" of 2020 has crushed the global economy and with it the manufacturing sector.
The decline in auto production led by demand reduction is impacting demand for chloroprene in the production of automotive parts& components. The $900 billion loss sustained by the collapsing construction industry is leading to steep declines in demand for rubber roofing, rubber flooring & geomembranes for waterproofing applications. With global GDP dipping into the red at -3% for the year 2020, sales of textiles, garments and apparel remains subdued. As businesses struggle to keep afloat, job cuts and bankruptcies are expected to rise sending millions into unemployment. Unemployment rates are climbing to worrisome levels in both developed and developing economies alike. In the US alone, over 5.2 million people have filed for unemployment claims over the last 1 month. The loss in consumer confidence and erosion of household wealth and discretionary spending will impact virtually every industry and business worldwide. The COVID-19 pandemic has therefore pushed consumers to conserve cash. With unemployment rates rising amid the virus induced economic crisis, consumers are cutting spending budgets. Unemployment rates have hit never-before highs with the US topping the charts with 12.5% unemployed as a % of total labor force. Social outlook against this background remains grim with households expected witness erosion in wealth. Personal financial outlook, community, economy, job security confidence, purchasing and investment confidence are all tumbling as the human and economic cost of the global pandemic rises. With consumer discretionary spends hit hard, polychloroprene used in textiles is declining in sync with falling demand for neoprene fabric products like diving and surfing suits. The declining CAPEX in the chemical industry highlights the ravages wrought by the pandemic on chemical plant operations, production, capacity expansion& plant upgrade plans.
In the post COVID-19 period, even as the market recovers, environmental issues associated with chloroprene rubber production will storm into the spotlight. Chloroprene rubber is associated with environmental degradation when not recycled or reprocessed. The rubber waste is produced from materials that are not properly discharged. The post-industrial waste matter is produced during molding and processing elastomers in the production line. Moreover, in certain situations the quantity of waste is equal to the production. The most suitable way of reducing amount of polymeric waste, as well as of minimizing environmental hazards produced by such wastes is improvement in recycling methods. Vulcanized rubbers cause major problem in recycling, while discharge rubber that is used as fuel in generating steam and electricity cause air pollution. Hence reclaiming of scrap rubber is the most desired technique for solving this problem. The reclaiming method, also known as devulcanization, can be roughly classified into two categories: chemical reclaiming and physical reclaiming techniques. The process of microwave devulcanization is a pollution control method for reclaiming sulfur vulcanized elastomer comprising polar groups. The high cost of chloroprene rubber will lead to a shift towards alternatives such as EPDM (Ethylene Propylene Diene Monomer), which is priced considerably low compared to CR. Chloroprene rubber, though versatile, faces challenge from many substitute materials such as natural rubber as well as other synthetic rubbers, including isoprene, acrylonitrile butadiene copolymer (nitrile rubber), epichlorohydrin rubber, and styrene-butadiene rubber. The threat of substitution has been particularly high in the automotive industry, which is one of the major end-use markets of chloroprene rubber.
Competitors identified in this market include, among others,
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