Executive Summary

Total UK apparent demand in 1994 for rubber manufactured products is estimated by Key Note to be worth £2.79bn compared with £2.65bn in 1993, which represents an increase in value terms of 5.3%. However, growth during the period 1990 to 1993, was virtually non-existent, as all the main demand sectors in the domestic economy were adversely affected by the recession, which continued for longer than was generally expected. Demand then began to recover strongly in 1994 and this recovery has continued into early 1995.

Basically, the UK's consumption of natural and synthetic rubber, amounting to around 350,000 tonnes per annum, is divided fairly evenly between the tyre manufacturing industry and the manufacturers of general rubber products. Synthetic rubber, which is used mostly in the production of miscellaneous rubber products, accounts for around 64% of UK consumption, and natural rubber, which is used mainly by the tyre industry, accounts for the remaining 36%. A large variety of general products are made in synthetic rubber because of the versatility that can be built into the compounds and formulations.

The surge in demand for rubber products is not confined to the UK as there has been a world-wide expansion in consumption, particularly from the motor vehicle producing countries. Apart from tyres the automotive industry also uses many rubber-based components in the construction of motor vehicles, e.g. hoses, fan belts, seals, suspension units, etc.

Existing capacity for the production of natural and synthetic rubber is only just sufficient to meet current demands, but the imbalance between world demand and supply of raw rubber could become acute unless capacity is quickly increased. Stock levels continue to fall and cannot easily be replenished so raw rubber prices are rising rapidly. The price increases include the chemicals used in the processing of raw rubber because of past closures in capacity when the industry was not very profitable.

There are relatively few options for the disposal of worn out tyres. Although there is a large retreading industry it is mostly concerned with renovating truck tyres. The bulk of car tyres are scrapped and put into landfills or disposed of illicitly. Some used tyres are shredded for alternative uses, e.g. in providing a soft surface for children's playgrounds or for mixing with road building materials and some are burnt for the generation of electricity, but this is a controversial activity because of pollution problems and the cost of the operation. No final solution has been found to deal with the problem of how to dispose of large quantities of used tyres without causing other problems.

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