Japanese Chemical Companies to Provide for High-Performance Tires Throughout Asia

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Researched by Industrial Info Resources (Sugar Land, Texas)--Last November, the European Union (EU) adopted new tire-labeling legislation that would give consumers a choice between different types of tires, according to performance variability. Many manufacturers predict that tires labeled for fuel efficiency will be the most popular in the wake of fuel-efficient automobiles, the move toward biofuels, and the regulation of fuel consumption. Other labels include wet grip and external rolling noise. This new labeling system, according to legislators and manufacturers alike, will become the primary driver in the increased production of high-end rubber. The system also more than likely will push manufacturers to use solution-styrene butadiene (S-SBR) in lieu of emulsion-styrene butadiene (E-SBR). S-SBR has advanced abrasion-resistant properties that allow subsequent tires to be labeled as fuel efficient.

Rubber manufacturers in Japan also are adopting this type of labeling system without legislation. The Japan Automobile Tire Manufacturers Association is basing the voluntary change on the EU's legislation, though the government seems to have no hand in prompting the change. Though the association cannot determine for certain whether the general Japanese public will take to the new system until the spring buying season, polls are indicating that consumers would be willing to pay for labeled advanced tires. Polls also have indicated that tires formulated for rolling resistance and anti-wear would be highly acceptable as well.

Though not directly involved in the manufacturing of tires, Japanese companies responsible for production of raw materials, such as Asahi Kasei Chemicals Corporation (TYO:3407) (Tokyo, Japan), Sumitomo Chemical Company Limited (OTC:SOMMY) (Tokyo), and Zeon Corporation (TYO:4205) (Tokyo), plan to build new rubber-manufacturing facilities specifically to cater to the demand for high-performance tires expected throughout Asia. All of these companies are planning to build new plants in Singapore due to the projected decline in domestic ethylene supplies. Zeon plans to begin construction of a $180 million facility during the latter half of next year on Singapore's Jurong Island and anticipates completion sometime early in 2013. The Jurong Island site is expected to produce about 100,000 metric tons per year of S-SBR.

Both Asahi Kasei and Sumitomo plan to begin construction within the Singapore Industrial Zone at the beginning of 2012. The former, which estimates the project to cost about $101 million, expects the construction of its 50,000-metric-ton-per-year plant to conclude early in the following year. Sumitomo's $70 million facility, with a planned capacity of 35,000 metric tons per year, is scheduled for completion at the end of 2012.

All of the S-SBR to be produced in Singapore, which has become a major chemical hub, will go on to serve as feedstock for the production of high-performance tires for Japan and the rest of Asia.

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