Nynas : Grabbing The New Opportunities

Nynas : Grabbing The New Opportunities

By Sharad Matade

“A lot of tyre companies have narrowed their focus and expanded in Asia, mainly in China and South East Asia, in the last five to ten years. Both local capacity consumption and exports to the US and European markets have increased in the region. As a consequence, we have invested heavily to enhance our refining capacity, storage capacity and get closer to our existing and potential customers. We already have a significant share in low PCA oil for the tyre segment in the region,” Pascal Verhoie, Regional Director for Asia, Middle East and Africa Region, Nynas Oil, told Tyre Asia.

The Stockholm-headquartered company has also invested storage capacity in Singapore, China and India. Last year Nynas opened a 32,000 cubic metres storage in Singapore, which has helped the company to speed up deliveries of naphthenic specialty oils and increase the availability in the Asia-Pacific region. With this, according to the company, delivery times will be shortened from six weeks to two weeks. “Now, we can bring bigger ships from our production facilities here and that helps us reduce the cost per ton and optimizing logistic costs,” adds Verhoie.

From the Singapore supply house, the company is supplying naphthenic specialty oils to Asia, Australia, and partly India. From the Europe hub Middle-East, Turkey and India are being catered. Nynas also plans to set up a storage depot on the west coast of India.

Though the market share of the company in the tyre oil segment in AMEA region is not clear, it holds either top or second position country to country, according to Verhoie . “Market share in Asia depends on country to country. For instance, in China and India, we are the second largest low PCA oil provider for tyres, while in Turkey and Middle- East we are number one,” Verhoie says.

The current geo-political turmoil in Middle-East has brought challenges to companies doing business in the region and it has also impacted Nynas’ business marginally. “There are relatively less tyre manufacturers in Middle East but in Egpyt, yes, there are few tyre and vehicle manufacturers. In Egypt, there has been an impact on our business but not to that extent that we are not able to supply anymore. In Turkey, we are not fully affected due to the ME turmoil. However, what is happening between Turkey and Russia may have some impact on our business in future but right now we have not had a hit due to the crisis in Turkey,” says Verhoie.

Nynas is going aggressive in growing markets. “We grow with our customer’s growth. We are opening activities and new offices in promising markets. For instance, we have opened an office in Japan for more proximity with our customers in the country and understand the market. We are also recruiting people in new markets. With these, we will not only supply our products but we will also share our knowledge and expertise to market we have gained over the years,” says Verhoie.

However, Nynas’s largest market for its low PCA oil for the tyre segment, China is facing economic slowdown and adding fuel to this, the US also imposed sanctions on imports from China ranged from 14.35 to 87.99 per cent and countervailing duties on products from China range from 20.73 to 100.77 per cent .

“Yes, China is one of the biggest markets for us. The country is facing economic slowdown and every sector is getting impacted with the slowdown. However, China is growing at a rate of 7 per cent per year and still quite substantial. Our market in China is related to export tyres where safe tyre oil is required. The US has imposed restrictions through import duties on tyres imported from China and that has led to a 30 per cent decrease in tyre exports from China. The reduction of exports has led to overcapacity in China and that has impacted us. However, despite this we have had a significant growth in tyre segment in China,” says Verhoie.

The growth for Nynas in China has been around 20 per cent per year in the last few years.

Today the Indian tyre industry is going through an interesting phase. Domestic companies are expanding their wings in international markets, whereas international tyre giants cementing their position to tap opportunities in the country. However, the country is still way behind when it comes to technically advanced and eco-friendly tyres.

Despite the lack of legislative compulsion in India, tyre companies in the country are inching towards sustainability on the anticipation of upcoming legislations and future consumers demand for eco-friendly tyres. “Many tyre companies in India are willing to use safe oil for making tyres. Indian companies which are in exports have also already started using safe oil for their tyre to adhere to international standards. Despite the lack of legislations to use low PCA oil and green raw materials, many tyre companies have taken CSR seriously and started using low PCA oils. Many tyre companies under their CSR programmes have gone green across their plants,” says the director of AMEA of Nynas.

In India, Nynas has already captured around 25 per cent share in safe oil supplied to tyre companies.

Though the Asia is poised to bring more opportunities, Verhoie sees the main challenge to be changing legislations and making customers prepared for it.

“More opportunities bring more challenges. The number of vehicles that are coming in China, India and South East countries is enormous. I think the challenges will be in terms of legislations and making people aware of such changes. We want to be a contributor to the changes in legislations and to educate people about it is the biggest challenge. We need to be patient and wait for the big opportunity and this opportunity will come once China recovers as it is the largest market. So we need to be patient and be in right position,” says Verhoie.

To educate people, Nynas is associated with different associations and organizes seminars around the world to inform its customers about upcoming legislations and take part with govt bodies, which take policy decisions. “We give lot of support to industry stake holders to create awareness and utilize the expertise we have gained over the years. Though such initiatives do not help us economically but it’s our duty to contribute to make the tyre industry eco-friendly through our business,” says Verhoie.

For Nynas’ R&D activities are also driven by the need of consumers.” We look deeper in perspective customers to see what challenges they are seeing. Based on that we look how we can contribute to their needs. Our R&D work is much more driven by the need of customers,” adds Verhoie.

Verhoie says Nynas plans to continue its efforts to produce sustainable products to supply to the tyre industry. “We continue to create oil which will contribute to the performance of tyre with less emission and impact environment. When it comes to the tyre industry, lot of pressure comes from emission and we will continue to develop those products to tackle the emission issue.”

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