Rubber market to worsen first before recovering around 2020: Lanxess

German synthetic rubber producer Lanxess is pessimistic about the near term outlook for the rubber market, but foresees the situation to turn for the better in five years.

“For the next two to three years, we clearly see that there will be challenges in the industry and for that reason we are not producing here in Singapore at nameplate capacity,” said its chairman, Matthias Zachert, in an interview.

The group will therefore only gradually ramp up the production of its new neodymium butadiene rubber (Nd-BR) plant in Singapore, which has a capacity of 140,000 tonnes. Mr Zachert was in town for the opening of the 200 million-euro (S$314 million) plant, which represents one of its largest investments globally.

The bearish rubber market will also be exacerbated by the slowdown in China, though he cautioned that this must be viewed in perspective. “The Chinese economy is today the second biggest economy in the world…you cannot expect that it will always grow by 7-10 per cent.”