EU can ban Russian rubber for tire production

Poland is campaigning for a ban on Russian synthetic rubber to be included in the new EU sanctions, which are set to be announced on February 24, the first anniversary of Russia’s all-out war against Ukraine.

Italy, Germany, Hungary, Romania, and Czechia, which have mainly relied on Russian rubber for tire production, oppose this idea.

The prospective ban may destroy tire producers in these countries, including Pirelli, Michelin, Continental, and Nokian factories. According to Interfax, this restriction would raise costs and make their goods less competitive than the United States, Japanese, and China tires.

In 2021, Russia could account for more than half of the EU’s synthetic rubber imports, down to around 30% last year.

The Russian rubber prohibition is claimed to have been campaigned for by Poland’s Synthos Group, headed by billionaire Michal Solowow. Synthos intends to resume rubber production at its factory in Schkopau, Germany, in March. It aspires to substitute the Russian offering.

However, Synthos’ appearance on the scene does not guarantee that the problem will be solved. The Polish company only manufactures specific grades of rubber, whereas tire manufacturing requires many more types, many of which are primarily manufactured in Russia and will be hard to replace.

Replacing Russian rubber was attempted as early as 2022 when some European tire makers resolved to boycott Russian rubber in response to Russia’s aggression. These manufacturers could replace two-thirds of the synthetic rubber previously purchased from Russia. 

Still, they frequently had to pay twice as much for items from the United States or China. They needed to spend more time and money adjusting manufacturing equipment. These increasing production costs, combined with energy inflation, raised the price of their tires.

According to the European Tyre and Rubber Manufacturers’ Association, sales of replacement consumer tires fell by 10.1% in the second half of 2022, while sales of replacement truck and bus tires fell by 8.2%.

As a result, several European tire makers attempted to avoid raising production costs by continuing to buy synthetic rubber from Russia. They may now be barred from doing so.

The proposed prohibition is unlikely to have a substantial impact on Russia. Previous sanctions have shown that the country’s producers have successfully diverted exports to Asia without being severely harmed by EU sanctions. However, the restrictions imposed on Russia should assist in forcing the Kremlin to end its aggression against Ukraine.

Europe can block Russian rubber with the support of Polish lobbyists and EU lawmakers. Still, in this situation, Brussels must devise a strategy to assist the industry and lessen European companies’ reliance on Russian rubber.