By on April 13, 2021

Those of you tracking the semiconductor shortage can probably take it easy for a while, as practically every industry group on the planet has tentatively agreed we’ll be seeing a chip deficit for a few years. Meanwhile, market analysts are trying to predict the next material we won’t have enough of and rubber is looking like an ideal candidate.

Rubber supplies are drying up and price increases are reportedly beginning to climb at an untenable pace. Despite several years of relatively stable availability and low prices, supply chain disruptions created by lockdowns have left latex harvesters in a bad position. Low prices encouraged many to over harvest their existing crop, rather than invest in farmland. But with shortages looking probable as countries began responding to the pandemic, China went on a buying spree to maintain a robust national stockpile in 2020. The United States was late to the party and now finds itself in a position where scarcity is driving rubber prices through the roof just when it needs to buy more.

Natural rubber prices hit a four-year high in February at $2 a kilogram. But market experts are claiming they’re actually just starting to pop off.  Robert Meyer, the former CEO of the rubber firm Halcyon Agri Corp., told Bloomberg that he envisions prices reaching $5 per kilogram within the next five years.

“The supply issues that we’re seeing now, they are structural,” said Meyer, who now works as a managing director for Angsana Investments Private Ltd. in Singapore. “They will not change very soon.”

But the issue is actually a lot bigger than the rubber problem. Many are arguing that we’re seeing the dangers of global supply chains and just-in-time manufacturing practices manifesting in real-time. With lockdowns having disrupted practically every industry in existence, all sorts of materials and components are becoming increasingly difficult to come by. Regional issues frequently make these issues worse. For example, Asian markets aren’t suffering quite so badly from the semiconductor shortage due to the location of the facilities responsible for their manufacturing and it’s a similar story with latex — as Thailand, Indonesia, Vietnam, China, and India are the world’s largest producers of natural rubber by far.

From Bloomberg:

Carmakers including Ford Motor Co. and Stellantis NV, formerly known as Fiat Chrysler, say they’re monitoring the rubber situation but have yet to feel an impact. General Motors Co., similarly, says it isn’t worried about its rubber supply. France’s Michelin, one of the world’s largest tire makers, is skirting port congestion by using air freight shipments direct from Asia.

But for suppliers reliant on U.S. distribution, rubber is already a concern.

“I’ve got everybody alerted that I’ll take materials as fast as they can get it to me,” said Gary Busch, director of global procurement at Carlstar Group, which makes tires for off-road and agriculture vehicles.

Natural rubber [or latex] is produced from the white sap of trees found in the warm, humid climates of countries such as Thailand and Vietnam. While petroleum-derived synthetic rubber is preferred for some applications, the natural version has properties that are critical for products such as gloves and packaging tapes — both of which have seen demand rise during the pandemic. And as the critical component in tires and anti-vibration parts under the hood, it’s more closely associated with the auto industry than any other.

While the United States and Europe use substantially less rubber than a country like China, they also don’t have any meaningful stockpiles of the material to speak of (unless the giant Uniroyal tire turns out to actually be made of rubber) and fewer ways of sourcing their own. Something tells us that might eventually become something the government will push to change, though it could be too late to effectively mitigate whatever disaster we’re heading into. Rubber is just the latest in a laundry list of material shortages we’re being warned about. Just about every metal that does into electronics is also showing a spike in demand, with some (e.g. copper and cobalt) likely experiencing massive shortfalls over the next decade.

But there’s a problem with just trying to source more. It takes about seven years until plants can produce a sufficient amount of sap for rubber and establishing new mines for precious metals usually takes a minimum of five years. These are just minimum estimates, however. A few bad seasons can delay rubber tree maturation by years and mining operations frequently run into prolonged setbacks after the initial planning phase is underway. We envision plenty of problems moving ahead, with petroleum byproducts being used to create even more synthetic rubber in the West.

[Image: Joseph Sohm/Shutterstock]

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42 Comments on “Rubber Shortages Become Latest Problem for Auto Industry...”


  • avatar
    SCE to AUX

    This is because cars come with standard 20″ tires today. We didn’t have rubber shortages when tires were 13-14″. /s

    EVs don’t have timing belts or accessory belts. That should help.

  • avatar
    28-Cars-Later

    “with petroleum byproducts being used to create even more synthetic rubber in the West.”

    But oil is evil sez Comrade Xiden.

  • avatar
    SPPPP

    Latex prices going up? Wow, those rubber harvesters might be able to eat 2 meals a day instead of just one.

    • 0 avatar
      SPPPP

      Since Youtube links are apparently getting scrubbed now, if you want to see something of what it’s like to work in that business, search Youtube for “Rubber tires — a dirty business” by “DW Documentary”.

  • avatar
    ajla

    All the supply chains are f*cked.

    nbcnews.com/business/consumer/get-ready-
    higher-grocery-bills-rest-year-n1263897

    fortune.com/2021/04/13/lumber-prices-2021-chart-price-of-lumber-futures-short-
    squeeze-home-sales-cost-april-2021-latest-
    update/

    • 0 avatar
      dal20402

      Ugh, the lumber prices. We keep having to reduce the scope of our remodel (now in permit stage) because the lumber budget line keeps busting the whole budget.

      • 0 avatar
        28-Cars-Later

        Consider steel framing?

        • 0 avatar
          dal20402

          It’s environmentally much worse and raises energy costs and HVAC load (steel conducts heat) but our builder has actually incorporated some structural steel elements, mostly to replace big wood beams, which are sometimes completely unavailable in the area.

          • 0 avatar
            28-Cars-Later

            Interesting I was not aware of an additional HVAC load, though it makes perfect sense.

          • 0 avatar
            Art Vandelay

            I’d pay the extra cost for the steel, but that is the guy who had to rebuild a 1/4 of his first home due to termite damage talking. At that point I wanted steel and poured concrete.

            But yes, the wood deal is crazy. I paid 50 bucks for a sheet of plywood so I could finish up some garage shelving over the weekend. I can’t imagine building right now.

          • 0 avatar
            28-Cars-Later

            @Art

            I tend to feel the same way; steel, concrete, and natural stone everything. I’m not sure if carbon fiber has a place in construction materials but I’d be curious to use it in certain circumstances as well.

  • avatar
    jkross22

    Maybe if automakers and tire makers ended their unholy alliance to put crap tires on all new cars being sold or leased, we might see a reprieve from part of this.

    Can’t speak for all makes, but our leased GLC came with Pirelli tires that lasted 19k miles. It’s a common complaint on MB forums. Pirelli didn’t respond to any calls, emails or Tweets I sent their way asking for an explanation of this. Mercedes corporate gave me the cell phone number of the Service Manager at the closest dealer to me, who told me that 20k miles is normal wear for tires on Mercedes.

    When I politely told him he was full of brown bovine material – that I routinely got 35-40k miles on similar tires on another car we have – he said that I got lucky and that all Mercedes only get 20k miles from tires. He was slightly less than thrilled that Merc’s corporate office was giving out his cell phone number, and threw them under the bus in our conversation. His professionalism really shone through.

    It’s good to see the hot bs Mercedes dealers spread isn’t limited to just the unreliable nature of their cars out of warranty. It also includes lying about tire wear and tire life.

    Hey Mercedes – The best or nothing, right?

    • 0 avatar
      gasser

      I agree with you 100%. I have a GLC also and the run flats are a horrible idea. Already had one flat and had to buy a new tire at the MB dealer to the tune of $319 plus tax. Additionally, those Pirelli run flats are unimpressive in their grip and annoying in their bouncing ride. Also MB saved $$ on providing no jack, no tire iron or no spare tire/wheel. I bought all 3 on eBay because I don’t trust a 50 mile range on a run flat. As soon as I have a bit of wear, I will change all 4 to something non run flat.
      If you don’t want to invest in a spare and tire tools, I direct you to Consumer Reports which today published a test of the best flat tire sealant/inflator systems.

    • 0 avatar
      jmo

      The better the tires in terms of quite and stickiness the shorter the lifespan. Mercedes figured you wanted the best. Silly them you wanted loud tires with poor grip that lasted a long time. Looking at the prices it’s not like they were trying to cheap out on you. Maybe you’d be happier with a Tucson or maybe a Santa Fe.

      • 0 avatar
        ajla

        “Mercedes figured you wanted the best.”

        I think “the best” would depend on application and I definitely reject the idea that every Mercedes should be wastefully running tires with summer-spec wear characteristics.

      • 0 avatar
        jkross22

        I have a 3 series that I drive like I stole it when taking corners, freeway on ramps and back roads. The tires last 35-40k miles. I’ve had Continentals and now Michelins on it.

        Could be that Merc and Pirelli put crap tires on their SUVs. Weird that you find that hard to believe. A company cheaping out on a product and relying on reputation. Hard to imagine.

        I drive the GLC much more sedately, because it’s no fun to fling it around.

      • 0 avatar
        Art Vandelay

        I don’t know @JMO…I got like 35k out of the tires on our old Santa Fe and it was a 2.4 that protested loudly at the thought of anyting resembling spirited driving.

        20k on non all out performance tire seems silly. I got right at 20 out of the OE summer tires (Bridgestone’s) on my old Fiesta ST and I drove it like the 2 year rental that it was daily and had a little track time in there.

        With respect to run flats, they were on my Corvette for exactly the drive home. They were around 8 years old, so that likely didn’t help but they were terrible.

    • 0 avatar
      indi500fan

      My Equinox came with Michelins made in Poland that were the best set of tires I’ve had on anything. Superb wet traction, quiet, and about half worn at turn in w/ 36,000 miles.

    • 0 avatar
      dal20402

      OEM tires are often coming with lower tread depth. Saves the OEM a few pennies, improves the results of magazine handling tests, and guarantees the tire maker a customer sooner.

      That said, a lot of luxury cars have factory suspension settings that are intended to maximize handling performance rather than tire life, and the weight of modern cars doesn’t help either.

  • avatar
    Cicero

    The solution seems obvious. The federal government should just mandate that new tires be made from corn.

    It worked for gasoline, right?

  • avatar
    schmitt trigger

    Please correct me if I am wrong,
    Hasn’t synthetic rubber mostly replaced natural rubber?

    • 0 avatar
      brn

      Ditto. I thought it happened decades ago. I’ve heard horror stories from the days when real rubber was used in tires.

    • 0 avatar
      ToolGuy

      Apparently 60/40 Synthetic to Natural (Michelin says Synthetic for passenger car tires?). [I know nothing about this topic. I do know (as of today) that my kid’s rear tires 100 miles away have a very strange wear pattern (read: “destroyed”) and as of right now I have no idea why.]

      https://www.globenewswire.com/news-release/2020/04/24/2021675/0/en/Insights-on-the-Synthetic-Rubber-Industry-in-the-United-States-to-2025-Motivators-Restraints-Opportunities.html
      https://thetiredigest.michelin.com/an-unknown-object-the-tire-materials

      • 0 avatar
        ToolGuy

        UPDATE: When you get new tires and get an alignment, all good. When you later change the rear hubs/bearings and don’t mark the orientation of the eccentric cam bolts on the lower control arm [or get another alignment], you will very likely throw the rear camber out (maybe a lot), and you will see the results of your fine work ~20,000 miles down the road. (Do it just right and the *inner* shoulder of each tire will wear down – where the soon-to-be-a-college-graduate driver will never notice it.)

        Blind spots: We all have them. My ‘tuition’ for this one will be the cost of two new tires, plus another alignment. Any good news? Rear springs are cheap and will be installed at the same time (front struts with springs and rear shocks went in when the vehicle joined our family).

    • 0 avatar
      aja8888

      Yes.

  • avatar
    Jeff S

    We have had tire shortages before the last one that I know of was in 1976. My older brother bought a brand new 1976 Gran Torino wagon without a spare tire. The dealer told him there was a shortage of new tires and that at a later date when spares were available Ford would contact him when they were available at the dealer. It took well into 1977 before my brother got a spare. The great tire shortage of 1976 new car purchasers of that year did not receive their spare tires until late 77. In a few years the manufactures offered more temporary spare on their vehicles like the new midsize GM cars introduced for MY 1978. Now a lot of new cars come without spares. Before 1976 there were rubber shortages during World War II. I would guess that a lot of new vehicles will be delivered without spare tires with a promise to get the customers spares when they are available. If the tire shortage lasts there might be more manufacturers including an air compressor and a can of Fix A Flat instead of spares as standard equipment. Also the manufacturers will increase the amount of synthetic rubber in their tires.

    https://www.nytimes.com/1976/05/16/archives/tire-supplies-thinning.html

    https://www.nytimes.com/1974/03/17/archives/tire-industry-facing-decline-the-radial-with-focus-on-mileage-is.html

  • avatar
    kcflyer

    I don’t suppose running the currency presses round the clock and cranking out trillions of dollars not backed by anything but hot air has anything to do with the skyrocketing commodity prices? Nah. Nothing to see hear. BTW, have you priced lumber lately?

    • 0 avatar
      redapple

      @KCFLY

      Yes. MMT will kill the country.
      #2- Quantitative Easing has NEVER WORKED anywhere it has been tried.

      We are going to get flattened economically in 2-3 years. A La 1929 or 1861. It is coming (with credit to Hickey and Dennis miller.)

  • avatar
    Jeff S

    “I don’t suppose running the currency presses round the clock and cranking out trillions of dollars not backed by anything but hot air has anything to do with the skyrocketing commodity prices?”

    That’s not new either. Late 60’s thru 70’s the
    currency presses were going full throttle
    and the US had skyrocketing inflation.
    Whip Inflation Now (WIN) was a 1974
    attempt to spur a grassroots movement to combat inflation in the US, by encouraging personal savings and disciplined spending habits in combination with public measures, urged by U.S. President Gerald Ford. The campaign was later described as “one of the biggest government public relations blunders ever”.

    https://en.wikipedia.org/wiki/Whip_inflation_now#:~:text=Whip%20Inflation%20Now%20(WIN)%20was,by%20U.S.%20President%20Gerald%20Ford.

  • avatar
    28-Cars-Later

    Sheesh just bring out the hovercars and be done with it.

  • avatar
    Verbal

    Look for a significant uptick in STDs and pregnancies.

  • avatar
    indi500fan

    Peeps didn’t drive in 2020, right? So fewer replacement tires needed?

  • avatar
    36hp

    It does seem like we are bumping up against all kinds of constraints.

    One of the more distressing signs I have read is from this article: “France’s Michelin, one of the world’s largest tire makers, is skirting port congestion by using air freight shipments direct from Asia.”

    Good lord! Rubber as air freight???

    So far I have been amazed how well things have worked, but I have to wonder….

    Thank you for another insightful article!

  • avatar

    How tire and chip shortages will affect US military readiness to the war with China?

    • 0 avatar
      Art Vandelay

      The US Army is really only ever at its best when it is forced to throw doctrine out the window and improvise. I think the appropriate saying would be to “eff around and find out” So long as we aren’t dumb enough to invade mainland China, we’d be fine.

  • avatar
    28-Cars-Later

    Maybe its time to occupy the Dutch East Indies again, I believe they had a number of rubber trees at one time.

  • avatar
    Art Vandelay

    Maybe that idiot on YouTube that put the wagon wheels on the Hellcat was on to something.

  • avatar
    daniel1967

    We are on our second Honda (1998 Civic, sold, 2011 CR-V AWD, daughter drives it now) and our second Subaru (2002 Forester, sold, 2013 Forester, wife’s car). The 2011 CR-V is the best vehicle I ever owned (had new Nissan Maxima, Ford Taurus, many others, currently own a 2017 CX-5 Grand Touring AWD). There is no question in my mind that Hondas are better vehicles. Better engines, better transmissions, better suspensions you name it it’s better. The only thing Subarus have for them is the AWD system which is slightly superior, and for current models, much better visibility. And wife likes Subarus so end of the story. I would take a Passport or Pilot over this any day.

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