Market Report
The Future of Tire Raw Materials to 2028
Advances in tire raw materials meet sustainability goals
The growth of electric vehicles, prioritization of sustainability and advancing government regulation are driving growth in tire raw materials, according to a new report from Smithers. The in-depth study, The Future of Tire Raw Materials to 2028, forecasts a 3.5% CAGR in tire raw materials volume to 2028 as tire makers work to meet changing requirements from OEMs, governments and other industry influences.
Electric Vehicles
Tires are being designed to meet the high load capacity of heavier vehicles, including EVs and hybrid cars. Advances in EVs are requiring stronger tires but with the paradox that they should be also lighter. The tire industry is focused on reducing tire weight and using materials that offer super properties at the present weight. For example, super tensile cords, butyls with improved impermeability and elastomers with better abrasion resistance are making tires stronger and longer lasting.
Global and regional pressures
Globally, inflation has driven up material prices as evidenced by lower tire company earnings. A mix of crude oil price and inflationary pressures are impacting input costs, including raw materials, energy, labor and logistics. This trend has been complicated by lasting geopolitical tensions resulting in higher tire raw material prices, such as synthetic elastomers. Over the forecast period, raw material suppliers will also face increased competition and idle plant capacity compared with pre-Covid market conditions.
In major European markets, the war in Ukraine has disrupted the supply chain, which has further driven up prices. Some tire companies have reacted to the war by moving their facilities out of Russia and are relocating them close to the markets they serve to simplify logistics and reduce transportation costs.
In Asia, the tire raw materials market is being influenced by continuous friction over Taiwan. The conflict is creating uncertainties that are compounded by extensive shutdowns due to Covid-19.
Ground-breaking legislation
Key legislation is also part of the tire raw materials landscape to 2028 with new regulations, including Euro 7 on the horizon. The new Euro 7 standards are intended to ensure cleaner vehicles and improved air quality to protect the health of European citizens and the environment. Euro 7 standards and CO2 emission standards for vehicles work to deliver air quality. Notably, the increased uptake of electric vehicles also creates certain air quality benefits. Euro 7 and the European Green Deal's zero-pollution ambition are aimed at giving the automotive supply chain a clear direction for reducing pollutant emissions.
The regulation states that effective July 1, 2025 for new light-duty vehicles (cars and vans), and two year later for new heavy-duty vehicles (lorries and buses which goes much further than Euro 6/VI and now also addresses non-exhaust particle emissions (from tires and brakes). This is the first time non-exhaust emissions have been regulated in this way; it will have a strong impact on some tire raw materials.
In the US, the California Air Resources Board (CARB), will require about 50% of new light- and medium-duty vehicles sold in the state to be zero-emission vehicles (ZEVs) by 2028 and 100% by 2035.
Europe’s REACH regulation also aims to enhance innovation and the competitiveness of the EU chemicals industry and places responsibility on industry to manage the risks from chemicals and to provide safety information on the substances.
Innovative technologies
There are several technologies impacting the tire industry and its use of materials. Electric vehicles, sustainable materials and sourcing, and various advances in information technology and connectivity are among the key influencers in this area.
One stand out advancement is advancing airless tire designs. The adoption of RFID is another impacting technology that is being used to monitor tire health, location and inventory. Soon the tire-automobile combination will provide plenty of information starting from raw material sources, traceability, distribution in the market and ability to talk with the vehicle on tire and vehicle performance and maintenance.