Japan's rising automobile production to result in rubber, polypropylene shortage

30-Aug-11

Rising automobile production in Japan is likely to lead to material shortages. Concerns over shortage of synthetic rubber and polypropylene are growing as major Japanese automakers plan to increase production from October 2011 to March 2012, as per Platts. Toyota Motor and seven other major manufacturers of passenger cars project a 2% y-o-y increase in global output in the six months, with major hikes planned in Japan. Japan's tire maker Bridgestone has notified automakers that orders for passenger car tires seems likely to exceed the company's domestic output capacity-leading to a shortage of an estimated 500,000 tires (about 5% of orders received this year). An increase in run rates is unlikely as Bridgestone is already operating it's seven domestic plants making passenger car tires 24*7. PP, used a key feedstock to produce autoparts and bumpers, is also facing supply dearth, as major producers struggle to keep up pace with demand. Inventories are running low at Japan Polypropylene's 640,000 tpa PP plant in Kashima, scheduled for regular maintenance from the end of this month through mid-October.