According to Huanxin.com, as one of the core varieties of synthetic rubber, rare-earth neodymium-based butadiene rubber (hereinafter referred to as rare-earth butadiene rubber) has become a key raw material for high-performance green tyres and high-end rubber products, thanks to its excellent properties of high abrasion resistance, low heat generation and low-temperature resistance. Recently, the China Chemical Industry News conducted an exclusive interview with Sun Baohua, Deputy Secretary-General of the China Synthetic Rubber Industry Association, regarding the development prospects of rare-earth butadiene rubber. He believes that with the explosive growth of the new energy vehicle industry, rare-earth butadiene rubber is entering a period of rapid market expansion globally.

Explosive Growth in High-End Demand and Accelerated Domestic Substitution

Rare-earth-based butadiene rubber is produced by polymerising butadiene monomers using rare-earth neodymium compounds as the primary catalyst. Compared to other butadiene rubbers catalysed by nickel or cobalt compounds, it offers superior abrasion resistance, low heat generation and low-temperature performance. It is particularly well-suited to the stringent material requirements of new energy vehicle tyres. New energy vehicles feature high starting torque, rapid acceleration and heavy vehicle weight, placing greater demands on tyre materials in terms of wear resistance and low rolling resistance. As a result, rare-earth butadiene rubber has become one of the premium raw materials for new energy vehicle tyres.

In recent years, the new energy vehicle industry has developed at a remarkable pace. Data from the China Association of Automobile Manufacturers shows that by 2025, cumulative sales of new energy commercial vehicles in China reached 954,000 units, representing a year-on-year increase of 65.5%. Su Bo, Deputy Director of the Strategic Advisory Committee for the National Manufacturing Power Strategy and former Vice Minister of the Ministry of Industry and Information Technology, stated at the High-Level Forum on the Development of Smart Electric Vehicles (2026) that China’s new energy vehicle penetration rate is expected to exceed 50% this year and surpass 70% by 2030.

“The rapid proliferation of new energy vehicles has become the core driver of demand for rare-earth butadiene rubber,” noted Sun Baohua. Between 2023 and 2025, domestic demand for rare-earth butadiene rubber is projected to reach 65,000 tonnes, 86,000 tonnes and 93,000 tonnes respectively, with market demand growing year on year; In downstream applications, the tyre sector, driven by growing demand for new energy vehicle tyres, will see demand rise from 46,000 tonnes to 73,000 tonnes, accounting for over 75% of the total. Beyond tyres, the material’s applications are gradually expanding into footwear, high-end conveyor belts, golf balls and other sectors, with the diversification of downstream applications further underpinning growth in the domestic market.

Domestic consumption of rare-earth butadiene rubber is highly concentrated and closely tied to the layout of the tyre industry. Sun Baohua stated: “The main domestic consumption areas are concentrated in major tyre-producing provinces such as Shandong, Jiangsu, Zhejiang and Anhui; among these, Zhejiang Province, as a key domestic rubber products processing base, has seen stable growth in demand for rare-earth butadiene rubber, with demand volumes for the three-year period from 2023 to 2025 projected at 0.7, 0.8 and 0.9 million tonnes respectively, each accounting for around 10% of total domestic demand.”

In addition to demand growth, the process of domestic substitution for rare-earth-modified butadiene rubber has also accelerated significantly. Sun Baohua noted that the ‘14th Five-Year Plan for the Development of China’s Synthetic Rubber Industry’ (hereinafter referred to as ‘the Plan’), published by the China Synthetic Rubber Industry Association, states that during the ‘14th Five-Year Plan’ period, technological innovation began to bear fruit, with the adoption rate of continuous polymerisation processes rising from 45% to 78%. Jinzhou Petrochemical’s third-generation rare-earth catalyst has seen a 15% reduction in costs; Yanshan Petrochemical’s long-chain branched BR9100 series has achieved import substitution; Zhejiang Transfar’s flexible production units have improved multi-grade switching response times by 40%, enabling rapid switching; and the world’s largest rare-earth butadiene monomer plant has been constructed, gradually breaking the overseas technological monopoly.

Regional patterns show marked divergence, with domestic enterprises actively expanding overseas

The global automotive industry is also accelerating its transition towards green and electric vehicles. In recent years, ‘green and low-carbon’ has become a global consensus. The密集 implementation and upgrading of EU green regulations have driven sustained growth in demand for new energy vehicles, whilst geopolitical conflicts have led to rising oil prices, further fuelling the surge in vehicle electrification. Driven by these factors, the global rare-earth butadiene rubber market is showing steady growth.

Sun Baohua explained that between 2023 and 2025, global demand for rare-earth butadiene rubber is projected to reach 470,000 tonnes, 520,000 tonnes and 560,000 tonnes respectively. Over the three-year period, cumulative growth will exceed 90,000 tonnes, with an annual compound growth rate maintained at over 9%. Globally, rare earth butadiene rubber is primarily produced by Arlanxeo. With the growth in domestic production capacity in recent years, by 2025, Zhejiang Transfar’s production and sales of rare earth butadiene rubber will rank second only to Arlanxeo, establishing the company as a rising star in the industry. From a regional perspective, the market landscape exhibits distinct divergences.

North-East Asia and Europe together account for approximately 75% of the global market, making them the key battleground for competition in production capacity and technology. It is reported that, driven by both the concentration of the tyre supply chain and the development of new energy vehicles, demand in Asia is set to rise from less than 170,000 tonnes in 2023 to 220,000 tonnes over the next three years, accounting for nearly 40% of total global demand; In Europe, despite the tightening of green tyre regulations, consumption growth has been limited due to the impact of geopolitical conflicts, with demand stabilising at between 170,000 and 180,000 tonnes, accounting for around 33% of global demand; the American market, meanwhile, is showing a steady upward trend, with demand rising to 56,200 tonnes by 2025 as market potential is gradually realised.

Although the global market for rare-earth butadiene rubber exhibits a distinct regionalised structure, market growth remains robust. Sun Baohua believes that the global market is attracting domestic rubber manufacturers to actively expand overseas, thereby releasing domestic surplus capacity and alleviating structural supply-demand imbalances within the industry.

Domestic production capacity continues to expand, but the actual capacity utilisation rate in 2025 remains low, with the growth rate of downstream demand not yet fully matching the pace of capacity expansion. The Plan also points out that the industry faces a coexistence of insufficient supply of high-end products and overcapacity in low-end production; the self-sufficiency rate for low-rolling-resistance rare-earth butadiene rubber used in new energy vehicle tyres is only 65%, whilst the capacity utilisation rate for general-purpose grades in 2024 stands at 75%, exacerbating the supply-demand imbalance.

To alleviate these supply-demand imbalances, domestic enterprises have actively expanded into overseas markets, achieving a breakthrough in the trade surplus. The Plan indicates that in 2023, net imports of butadiene rubber stood at 80,000 tonnes; from January to August 2025, a surplus of 39,300 tonnes was achieved; and exports for the full year of 2025 are projected to reach 320,000 tonnes, representing a year-on-year increase of 14.3%, thereby completely reversing the net import pattern. Furthermore, the structure of imports and exports has been further adjusted, with the proportion of rare-earth butadiene rubber exports rising from 5% to 18%; imports of high-performance neodymium-based products accounted for 65% of total imports, primarily from countries such as South Korea and Japan. The international market layout has been optimised, with the RCEP facilitating improved market access to ASEAN. Export destinations have diversified from a reliance on East Asia to include countries along the ‘Belt and Road’ route, with significant growth in exports to Southeast Asia, the Middle East and Africa.

Development Opportunities and Challenges Coexist: Rare Earth Butadiene Rubber Industry on the Rise

During the 15th Five-Year Plan period, the rare earth butadiene rubber industry faces a situation where development opportunities and challenges coexist, with an urgent need to address prominent issues such as shortcomings in core technological equipment and insufficient resilience in the industrial chain.

In terms of development opportunities, the industry holds great promise. The Plan highlights two key factors: firstly, structural growth in downstream demand, with the development of new energy vehicles driving an average annual growth of 8.7% in demand for low-rolling-resistance tyres, whilst the amount of butadiene rubber used per tyre in new energy vehicles is 15% to 20% higher than in conventional models. Secondly, policy benefits continue to be realised: high-performance synthetic rubber projects are eligible for a 15% corporate income tax concession and a 30% additional deduction for R&D expenses, whilst export tax rebate rates may be raised to between 15% and 17%. Furthermore, the ‘dual carbon’ policy is driving the development of bio-based and recycled rubber.

At the same time, numerous challenges are intensifying pressure on the industry’s development. Firstly, breakthroughs are urgently needed in the core technologies and equipment for rare-earth-based butadiene rubber; patents for high-performance neodymium-based catalysts are primarily held by international giants such as Lanxess and Kumho, with domestic products lagging significantly in terms of activity and stability. Key technologies such as the control of molecular weight distribution and long-term operation in continuous polymerisation processes have not yet been fully mastered, and the adoption rate of flexible production facilities remains below 30%. Secondly, resource and environmental constraints are intensifying. With crude oil prices expected to fluctuate widely over the medium to long term, the stability of butadiene supply—a key raw material—remains uncertain. Furthermore, following the extension of the national carbon market to the petrochemical sector, carbon emission costs per unit of product are projected to rise by 30% by 2030, placing 300,000 tonnes of outdated production capacity under pressure to be phased out.

In response, Sun Baohua believes that the rare-earth butadiene rubber industry should prioritise the following during the 15th Five-Year Plan period: Firstly, tackling key technological challenges. Conduct research into the targeted synthesis of high-performance rare-earth catalysts and the precise regulation of molecular chain structures to develop low-rolling-resistance products; by 2027, master the synthesis and polymerisation processes for bio-based butadiene and establish a 50,000-tonne industrial-scale facility; advance laboratory technologies for butadiene rubber and butadiene resin rubber-plastic composites towards pilot-scale and mass production.

Second, diversify the export market. Deepen engagement in the Southeast Asian market, supporting tyre production capacity in countries such as Thailand and Vietnam; increase the proportion of exports to ASEAN to 45% by 2030; expand into the Middle East and African markets, and establish regional marketing centres; leverage the ‘Belt and Road’ initiative to enter the mid-to-high-end European market, achieving 60% coverage of overseas channels.

Thirdly, we will develop high-end production capacity projects, with a focus on advancing the rare-earth-modified butadiene rubber project to add 400,000 tonnes of high-end capacity, thereby consolidating our leading position in high-performance rubber for downstream applications; we will support key enterprises in establishing flexible production bases to form a high-end product portfolio where neodymium-based, modified low-cis butadiene, and modified solution-polymerised styrene-butadiene rubber complement each other’s strengths.

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