Economics of Process Aid use Asia Tyre & Rubber Conference December 2 – 3, 2011 Hari Chandra...

Economics of Process Aid useEconomics of Process Aid use

Asia Tyre & Rubber ConferenceAsia Tyre & Rubber ConferenceDecember 2 – 3, 2011December 2 – 3, 2011

Hari Chandra

Quantum Polymer

Cleveland, Ohio

ContentsContentsGDP growth of fast growing economies

Rubber output and price trends

Options to ease pressure on NR demand

Ecoreen and Ecorized Tire Rubber (ETR)

Ecoreen use to reduce cost and NR consumption

Findings and Recommendation

GDP-US

02000400060008000

10000120001400016000

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

Year

$ B

illio

nUS GDP 1950 - 2010US GDP 1950 - 2010

GDP Growth China & IndiaGDP Growth China & India

Exchange: US$1 = 6.4 RMB

Indian Rupee Conversion rate US$1:INR 50

China Automobile production by yearYear Production (in million units)

1992 1.0

1999 1.2

2000 2.07

2001 2.33

2002 3.25

2003 4.44

2004 5.07

2005 5.71

2006 7.28

2007 8.88

2008 9.35

2009 13.79

2010 18.06

Indian automotive production

Year Car Production

1999 533,149

2000 517,957

2001 654,557

2002 703,948

2003 907,968

2004 1,178,354

2005 1,264,000

2006 1,473,000

2007 1,713,479

2008 1,846,051

2009 2,175,220

2010 2,814,584

World Auto OutputWorld Auto OutputYear Units % change

1999 56,258,892 6.20%

2000 58,374,162 3.80%

2001 56,304,925 -3.50%

2002 58,994,318 4.80%

2003 60,663,225 2.80%

2004 64,496,220 6.30%

2005 66,482,439 3.10%

2006 69,222,975 4.10%

2007 73,266,061 5.80%

2008 70,520,493 -3.70%

2009 61,791,868 -12.40%

2010 77,857,705 26.00%

China's Car output

0

5

10

15

201992

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Year

Cars

Mill

ions

Indian automotive output

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Year

Num

ber

of C

ars

Global Auto Production

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Units

Yea

rWorld Auto OutputWorld Auto Output

Average Natural Rubber-SMR 20-Prices

Year USCent/KG

2000 64.3

2001 54.5

2002 75.9

2003 100.5

2004 122.5

2005 139.4

2006 195.8

2007 216.7

2008 254.4

2009 183.8

2010 333.6

2011 470.7

SMR 20 average Prices

0

100

200

300

400

500

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

Year

US

Ce

nts

pe

r K

G

MRB FOB NOON PRICES FOR MRB FOB NOON PRICES FOR SMR 20 (US Cents/Kg)SMR 20 (US Cents/Kg)January - October 2011January - October 2011

World Rubber Output in ( X 000) tons

Year NR SR Total

2000 6,762 870 17,632

2001 7,332 10,483 17,815

2002 7,326 10,877 18,203

2003 8,005 11,341 19,361

2004 8,774 11,961 20,707

2005 8,896 12,100 21,004

2006 9,706 12,653 22,444

2007 9,833 13,387 23,188

2008 10,042 12,743 22,779

2009 9,662 12,087 21,704

2010 10,291 14,002 24,293

World NR, SBR & Total Rubber output

0

5,000

10,000

15,000

20,000

25,000

30,000

Year

Outp

ut Tons X

1000

NR

SR

Total

Source: Malaysian Rubber Board

Growth of China & India Auto and Growth of China & India Auto and NR& SR sectors for 2001 - 2010NR& SR sectors for 2001 - 2010

Sector

Growth Averages

Average Annual Growth%

China auto output 19 %

India auto output 16%

Natural Rubber (NR) output 4 %

Synthetic Rubber (SR) output 2 %

NR plus SR output 3%

NR – SMR 20 price increase 19%

China & India combined auto 19%

Demand trend and price hikeDemand trend and price hike

China's Car output

0

5

10

15

20

19

92

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

Year

Ca

rs M

illio

ns

Indian automotive output

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1999

2001

2003

2005

2007

2009

Year

Nu

mb

er

of

Ca

rs

SMR 20 average Prices

0

100

200

300

400

500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Year

US

Cents

per

KG

World NR, SBR & Total output

0

5,000

10,000

15,000

20,000

25,000

30,000

Year

Ou

tpu

t T

on

s X

100

0

NR

SR

Total

Options to resolve scarcityOptions to resolve scarcity

Increase NR with plantingLimits: speed and growth-gestation / Land

Increase SR with investment in plantsLimits due to fossil fuel raw material scarcity

Design lighter weight tiresPossible

Recycled rubber Feasible

Recycled RubberRecycled Rubber

Abundant source: Used Tires

Used Tires in USUsed Tires in US

One tire per population per yearAt 350 Million there are 350 Million TireThe amount of Rubber compound

3.0 Million Tons 60% Polymer – mix of NR and SR 1.8

Million Tons

Current Used Tire DisposalCurrent Used Tire Disposal

Use Percent

Ground Rubber 26.2

Tire Derived Fuel 40.3

Used Tire 7.2

Civil Engineering 5.5

Reclaimed 2.5

Others 5.7

Land Fill 12.6

Current Used Tire DisposalCurrent Used Tire DisposalUse Percent & Rubber/Carbon

Tons

Ground Rubber 26.2 % 786,000 Tons

Tire Derived Fuel 40.3 % 1,209,120 Tons

Used Tire 7.2 %

Civil Engineering 5.5 %

Reclaimed 2.5 %

Others 5.7 %

Land Fill 12.6 %

Used Tire Disposal

Civil

Engineering

Used Tire

Tire Derived

Fuel

Ground Rubber

Land DisposalRecalimed Others

Devulcanization & Set backsDevulcanization & Set backs

Low green strengthPoor TackIncreased ViscosityInability to hold fillers

Possible solution:Use of Liquid (Depolymerized) NR

Depolymerized Natural Rubber DPRDepolymerized Natural Rubber DPR®® applicationsapplications

Rubber Process Aid – ML4 drops by 5- 20 units

Rubber Performance Improvement Rheology modifier for lubricants Asphalt additive Has ability to bind large volumes (10X)

of fillers

Impediments to use of DPRImpediments to use of DPR®®

Liquid and difficult to handleLimited supply sourceHigh cost:

When Natural Rubber was at $1.50 per LBDPR® was at $3.50 / LB

..

.

Ecoreen Process Aids DPR® Substitute

• Composed ofVirgin polymers Pre cross-linked rubber (vulcanized Rubber)*

• * Types: Tire Rubber (T), Butyl Rubber (B),EPDM (EP), NR (N) and others

Ecoreen T for Tire Ecoreen T for Tire CompoundsCompounds

Free Flowing Pellets Versus Liquid DPR® Function: Plasticizer to reduce mix

cycle time and increases filler holding capacity

Reactive: Cures with the rest of polymer matrix and non migrating

Ecoreen T -Tire Rubber DPEcoreen T -Tire Rubber DPApplicationsApplications

Rubber Process Aid – ML4 drops by 20 units.

Improves tack & Green Strength Rubber Performance Improvement Rheology modifier for lubricants Asphalt additive Thermoplastic Rubber base Has ability to bind large volumes of fillers

Ecorized Tire Rubber (ETR)Ecorized Tire Rubber (ETR)

Tire Rubber Powder (Tire Crumb) is “ecorized” to different levels for use in various applications by treating ground tire powder with Ecoreen T process aid

Tire Crumb after milling (Ecorized) with 10 PHR Ecoreen T & Curatives

“Devulcanized” Tire Crumb with Curatives, no Ecoreen

Clay Clay Versus Versus

Ecorized Tire Rubber (ETR) Ecorized Tire Rubber (ETR)

Comparison

SG of Clay and Tire Filled MixesSG of Clay and Tire Filled Mixes

Mix #Clay Level

Clay Mix SG

Clay MixWeight /Cu Ft.

ETR Level Tire Crumb Mix SG

1 100 1.28 80 LB 100 1.12

2 200 1.44 90 LB 200 1.12

3 300 1.57 98 LB 300 1.12

4 400 1.68 105 LB 400 1.12

5 500 1.75 109 LB 500 1.12

6 600 1.82 114 LB 600 1.12

7 700 1.89 118 LB 700 1.12

8 800 1.95 122 LB 800 1.12

9 900 2.00 125 LB 900 1.12

10 1000 2.04 127 LB 1000 1.12

Weight of ETR filled at all levels: SG 1.12, weight 70 LB / Cu Ft

1.00

1.20

1.40

1.60

1.80

2.00

2.20

100 200 300 400 500 600 700 800 900 1000

Loading PHR

Den

sity

SG of Ecoreen TC Vs ClaySG of Ecoreen TC Vs Clay

Clay

Ecoreen TR

Cost of weight Vs VolumeCost of weight Vs VolumeFillers: Clay and E. Tire CrumbFillers: Clay and E. Tire Crumb

Weight per LB, Volume per Cu FtWeight per LB, Volume per Cu Ft –– 66’’ X 4 X 4’’ X X ½”½” Mat Mat

Filler Level

Clay Filler

Cost $/LB

E.Tire Crumb

Cost / LB

Clay Filler$ per Cu Ft

E.Tire Crumb

$ per Cu.Ft

100 0.70 0.76 $ 55.94 $ 53.14

200 0.57 0.64 $ 51.24 $ 44.75

300 0.48 0.57 $ 47.05 $ 39.86

400 0.42 0.52 $ 44.05 $ 36.36

500 0.38 0.49 $ 41.52 $ 34.26

600 0.34 0.46 $ 38.63 $ 32.16

700 0.31 0.44 $ 36.58 $ 30.77

800 0.29 0.43 $ 35.30 $ 30.07

900 0.27 0.41 $ 33.71 $ 28.67

1000 0.26 0.40 $ 33.11 $ 27.97

0.20

0.30

0.40

0.50

0.60

0.70

0.80

Loading PHR

Co

st /

LB

Cost per LB Ecoreen TC Vs ClayCost per LB Ecoreen TC Vs Clay

Ecoreen TR

Clay

Cost by Volume ECoreen TC Cost by Volume ECoreen TC Vs Clay per Cu Ft (6Vs Clay per Cu Ft (6’’ X 4 X 4’’ X X ½”)½”)

$20.00$25.00$30.00$35.00$40.00$45.00$50.00$55.00$60.00

Loading PHR

Co

st $

/ C

u F

t

Clay

Ecoreen TR

 Filler PHR Mix with Clay Mix with ETR

0 63% 63%

100 38% 60%

200 28% 58%

300 22% 58%

400 18% 57%

500 15% 57%

600 13% 57%

700 12% 56%

800 10% 56%

900 9% 56%

1000 9% 56%

RHC Content in Clay and ETR RHC Content in Clay and ETR Filled N 110 Black MixFilled N 110 Black Mix

RHC in Mix 9438 with Clay & ETR

0%10%20%30%40%50%60%70%

Filler Level PHR

% R

HC

in M

ix

Clay

ETR

RHC: Rubber Hydro Carbon

Advantages of ETR based MixAdvantages of ETR based MixLighter weight – constant SG at 1.12 at all levels

Higher recycled content

Releases pressure on demand for NR and SR

Able to reduce costs substantially while meeting quality standard

Ref: 9340

Material $ per LB Parts % $/ LB Mix

Rubber $ 2.00 100 53% $ 1.07

N 330 Black $ 0.45 60 32% $ 0.14

Zinc Oxide $ 0.93 5 3% $ 0.02

Stearic Acid $ 0.63 2 1% $ 0.01

Wax $ 0.45 2.5 1% $ 0.01

Antioxidant TQ $ 1.85 1 1% $ 0.01

6PPD $ 2.30 1.5 1% $ 0.02

N. Oil $ 0.53 15 8% $ 0.04

Ecoreen TR $ 0.43 0 0% $ -

Total 187 1 $ 1.32

Tire Tread Mix – No Ecoreen TC

Ref: 9340

Material $ per LB Parts % $/ LB Mix

Rubber $ 2.00 100 26% $ 0.52

N 330 Black $ 0.45 60 16% $ 0.07

Zinc Oxide $ 0.93 5 1% $ 0.01

Stearic Acid $ 0.63 2 1% $ 0.00

Wax $ 0.45 2.5 1% $ 0.00

Antioxidant TQ $ 1.85 1 0% $ 0.00

6PPD $ 2.30 1.5 0% $ 0.01

N. Oil $ 0.53 15 4% $ 0.02

Ecoreen TR $ 0.43 200 52% $ 0.22

Total 387 1 $ 0.86

Tire Tread Mix with 200 PHR Ecoreen TC

Ref:   9338 / N 110 9339 / N 220 9340 / N 330

Material$ / LBMaterial Parts %

$/ LB Mix Parts %

$/ LB Mix Parts %

$/ LB Mix

Polymer 2.00 100 63 1.25 100 57 1.15 100 53 $ 1.07

Black and Oil 0.68 48 30 0.20 62 36 0.19 75 40 $ 0.19

Activators 0.84 7 4 0.04 7 4 0.03 7 4 $ 0.03

Anti Degradants 1.29 5 3 0.04 5 3 0.04 5 3 $ 0.03

ETR   0 0 - 0 0 - 0 0 $ -

Total   160 100 1.53 174 100 1.42 187   $ 1.32

Premium Tread Mixes

Ecorized Tire Rubber effect on Cost

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

$1.10

$1.20

$1.30

$1.40

$1.50

$1.60

Ecorized Tire Rubber Loading

Co

st $

per

LB

9338

9339

9340

Ecorized Tire Rubber costs $0.43 per LB

Ecorized Tire Rubber on cost

$0.80

$0.90$1.00

$1.10

$1.20

$1.30$1.40

$1.50

$1.60

Ecprized Tire Rubber PHR

Co

st p

er

LB

9338

9339

9340

ETR at loadings from 0 to 100

ETR cost: $0.43 per LB

Ecoreen 2.0 costs $0.65 per LB

Ecoreen 2.0 level on Cost

$0.70

$0.80

$0.90

$1.00

$1.10

$1.20

$1.30

$1.40

$1.50

$1.60

0 200 400 600 800 1000

Ecoreen PHR

Co

st $

per

LB

9338

9339

9340

Three ProductsThree Products

1. Ecoreen T Process Aid($0.65)Not made into product by itself

2. Ecoreen Master BatchFor blending and making products by itself ($0.80)

3. Ecorized Tire Rubber (ETR)Polymer filler to reduce cost and improve process / product($0.43)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

TreadMBEcoreen MBEcoreen TETR

Control 9346

9345 9343 9344 9342Ecoreen 50% Ecoreen 25% Ecoreen TR 500 PHR Ecoreen TR 100 PHR

$1.20 /LB $1.40/LB $1.14 / LB

$1.60 / LB

$0.95 / LB

Examples of poor flow in spider test

FindingsFindings

Ecorized Tire Rubber decreases cost of product through loading high levels in tire mixes and molded products while improving processing characteristics and final product performance

RecommendationRecommendation

Ecorized Tire Rubber / Crumb can be used at high loadings (100 to 500 PHR) in tire tread and retread formulations.

Quantum will provide anyone masterbatch samples upon request with specification

`̀

Mix 2 Masterbatch

Final compound with cure

Mix 2 Tire Mix 2 Tire

Mix 1 TireMix 1 Tire

Mix 223 TireMix 223 Tire

Mix 2 Tire

Thanks to Asia Tyre Rubber Thanks to Asia Tyre Rubber Conference 2011 Organizers for Conference 2011 Organizers for

this opportunitythis opportunity