10 Best Rubber and Plastics Stocks To Buy
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In this article, we discuss 10 best rubber and plastics stocks to buy. If you want to skip our detailed discussion on the rubber and plastics industry, head directly to 5 Best Rubber and Plastics Stocks To Buy.
In 2022, the worldwide market demand for natural rubber was valued at $30.61 billion. Expert Market Research expects it to increase at a compound annual growth rate (CAGR) of 3.5% during the forecast period from 2023 to 2028. By 2028, it is estimated that the market value for natural rubber will reach approximately $37.63 billion. The Asia Pacific region is the dominant leader in the natural rubber industry, with Thailand, Indonesia, and Malaysia being primary suppliers. Additionally, Vietnam is emerging as a notable sourcing location and has the potential to become a major rubber producer in the near future. The demand for natural rubber in the Asia Pacific is mainly driven by the growing automobile industry and the rising need for latex products such as condoms, belts, gloves, and more. Thailand is the leading supplier for the global natural rubber market, holding a 37% market share.
The global rubber market experienced a significant decline in demand in 2022 due to ongoing disruptions in the supply chain. As 2023 progresses, experts expect that the rubber industry will witness notable recovery in terms of market performance. However, the abandonment of China's zero-Covid policy and the ongoing conflict between Russia and Ukraine are two major global phenomena that greatly influence the future demand for rubber worldwide. In line with market recovery, rubber and plastics companies are making big moves. For example, Pirelli, a multinational tire manufacturer from Italy, recently entered into an agreement to acquire 100% ownership of Hevea-Tec, the largest independent processor of natural rubber in Brazil. The deal, valued at approximately 21 million euros ($22.9 million), is expected to be finalized by the end of 2023, pending approval from antitrust authorities. This acquisition will enhance Pirelli's access to natural rubber in Latin America, ensuring a consistent supply in the region and increasing overall efficiency. Pirelli also stated that the purchase of Hevea-Tec will enable them to strengthen their control over the natural rubber supply chain, leading to a reduction in CO2 emissions through local sourcing.
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Similarly, in the beginning of June, Exxon Mobil Corporation (NYSE:XOM) announced that it is initiating a multi-billion dollar petrochemical facility in China. This is the oil and gas giant’s new growth strategy, despite the mounting US-China tensions. According to S&P Global, this facility is the largest among several other new projects in China that are being developed by different companies to produce ethylene, which is a key component in the production of plastic. By means of this new facility in China, Exxon Mobil Corporation (NYSE:XOM) will gain a significant share in the top emerging market for petrochemicals. This market supplies the plastics, resins, and fibers that are utilized by China's manufacturing sector to produce common consumer goods found in households worldwide. Exxon Mobil Corporation (NYSE:XOM) is highly motivated to move forward with its investment since it forecasts that the demand for petrochemicals will continue to grow significantly beyond the demand for oil, which is expected to remain comparatively stable until 2050. Petrochemicals such as ethylene and polypropylene, which serve as the base components for manufacturing plastic bottles, food packaging, and medical instruments, are more difficult to replace with low-carbon substitutes. Exxon expects a 42% global increase in chemical demand from 2017 to 2030, compared to a mere 5% increase in gasoline demand.