Japan's Kuraray Co Ltd reported a 42 percent plunge in first-half operating profit as its rubber and speciality chemicals business grappled with weakened European demand and inventory valuation losses, prompting the company to slash its full-year earnings forecast.

The Okayama-based manufacturer, known for its synthetic rubber and speciality polymers used in automotive and industrial applications, posted operating income of 26.3 billion yen for the six months ended June 30, down from 45.5 billion yen a year earlier.

Net sales slipped 2.7 percent to 400.0 billion yen, with the company's flagship vinyl acetate segment - which includes rubber-related products - bearing the brunt of the downturn as volumes declined across key markets.

"Sales volume did not increase as much as expected due to the European economic stagnation and other factors, and overall segment income decreased due to the negative impact of inventory valuation differences and higher raw material and fuel prices," the company said in its earnings statement.

The vinyl acetate division, Kuraray's largest revenue contributor, saw operating income tumble 31.9 percent to 29.9 billion yen despite maintaining sales of 202.9 billion yen. The segment includes the company's EVAL barrier resins used in food packaging and automotive fuel tanks, as well as polyvinyl alcohol (PVOH) resins with rubber-like properties for industrial applications.

Kuraray's isoprene chemicals and elastomers business, which produces synthetic rubber compounds, showed signs of recovery with operating losses narrowing to 1.3 billion yen from 4.0 billion yen a year earlier. Sales volumes increased as demand remained firm, particularly in Europe and the United States, whilst operations at the company's Thai manufacturing base stabilised.

However, the broader economic malaise weighed heavily on performance. Rising natural gas costs in the US and Europe - key raw materials for rubber production - further squeezed margins. US natural gas prices averaged USD 3.69 per MMBtu compared with USD 2.21 a year earlier, whilst European gas costs climbed to 41 euros per MWh from 30 euros.

The disappointing first-half results prompted Kuraray to revise down its full-year operating income forecast to 75.0 billion yen from an earlier projection of 90.0 billion yen, though it maintained its annual dividend at 54 yen per share.

Chief Financial Officer Hitoshi Kawamura highlighted inventory valuation differences as a significant drag on earnings, particularly affecting the company's rubber and polymer segments, where raw material price volatility has been pronounced.

Looking ahead, Kuraray expects second-half performance to improve, with operating income projected at 48.7 billion yen compared with 26.3 billion yen in the first half. The company is banking on a gradual recovery in European demand and the benefits of recent capacity optimisations.

The firm is also pursuing strategic shifts in its portfolio, including plans to expand its optical-use PVOH film production line and the acquisition of US-based Nelumbo Inc, whilst discontinuing production of certain acrylic polymers and polyester-related products.

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The Association of Natural Rubber Producing Countries (ANRPC) published its Monthly Natural Rubber Statistical Report for August 2026, noting firmer prices in several markets. Supply constraints, stable downstream demand and persistent geopolitical and macroeconomic uncertainty shaped the month. Renewed conflict and disruptions to major shipping routes added further pressure.

Physical prices for major grades moved in different directions. SMR-20 in Kuala Lumpur averaged USD 2.31 per kg, up 4.25 percent from July, while STR-20 in Bangkok rose 1.40 percent to USD 2.39 per kg. RSS-3 dropped 4.18 percent to USD 2.80 per kg, but RSS-4 in Kottayam gained 0.57 percent to USD 2.92 per kg. Latex-in-bulk fell 4.73 percent to USD 1.73 per kg. Brent crude averaged USD 91.08 per barrel, driven by concerns over possible restrictions on oil shipments through the Strait of Hormuz and wider Middle East instability, which raised energy supply risks and strengthened the oil market risk premium.

On trade, China's imports climbed 3.39 percent month-on-month, while India fell 10.18 percent and Malaysia dropped 8.24 percent; Viet Nam rose 5.08 percent. Exports advanced 5.63 percent in Viet Nam but declined in Thailand (-5.24 percent), Indonesia (-5.36 percent), Malaysia (-1.48 percent) and Cambodia (-1.88 percent).

Global production is projected to rise 0.6 percent to 15.039 million tons in 2026 from 14.952 million tonnes in 2025, after revisions to Thailand's 2025 output and updated 2026 estimates for Thailand, Malaysia and Indonesia. Weather, including erratic rainfall and drier Southeast Asian conditions, affected output. August 2026 production was estimated at 1.396 million tonnes, down 4.51 percent from 1.462 million tonnes a year earlier. Demand is forecast to grow 0.4 percent to 15.356 million tonnes in 2026 from 15.301 million tonnes, with the largest consumption gains expected in China, Malaysia and Cambodia. Prospects depend on vehicle sales, tyre production, shipping conditions and weather-related supply disruptions, while steady EV-linked demand supported modest growth led by China and India. The ringgit traded between RM4.02 per USD and RM4.09 per USD, and the baht between 32.68 and 33.34. The SHFE January 2027 contract averaged 18,109 CNY per tonne, up 7.78 percent month-on-month, while the SGX November 2026 contract averaged USD 2.24 per kg, up 4.32 percent.

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HS HYOSUNG has formalised a memorandum of understanding (MoU) with the State Government of San Luis Potosí, with the signing taking place at the World Trade Center Mexico City. The event formed part of the Korea-Mexico Business Forum, held alongside the Korean economic delegation's visit to Mexico.

Attending officials included Marcelo Ebrard, Mexico's Secretary of Economy, and Mario García Valdez, Secretary of Economic Development of San Luis Potosí. The two sides confirmed their shared resolve to back the company's local investment and regional growth. Separately, HS HYOSUNG's leadership met bilaterally with Secretary Ebrard to elaborate on its strategic vision and investment plans.

The agreement sets out a phased expansion of HS HYOSUNG's investments in San Luis Potosí beginning in 2027, with the goal of creating a major advanced materials production hub that bolsters supply for North American and wider global markets. The company's advanced materials span tyre cord, a flagship world-leading product, along with mobility, energy, aerospace and defence applications. Its North American operations, spanning Mexico and the United States, turn out tyre cord, airbag materials and mobility interior components for global leaders such as General Motors and Goodyear, underpinned by a highly dependable global supply chain.

Nak-yang Sung, CEO, HS HYOSUNG ADVANCED MATERIALS, said, “This investment goes beyond establishing a simple manufacturing base – it reflects our strategy to turn Mexico into a pivotal hub connecting North America with global supply networks. We are also committed to strengthening local supply chains and creating high-quality jobs to contribute directly to the region's industrial ecosystem.”

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Kumho Petrochemical Group is steering its business towards research-driven, higher-value outputs as oversupply and soft demand continue to weigh on the worldwide petrochemical sector. The Seoul-based group outlined plans to boost spending on speciality chemicals, sustainable materials and novel production methods, a push intended to lift profits while building a foundation for future expansion.

Underlying the move is a deliberate evolution in the group's identity, from a bulk materials vendor to a provider of technology-backed solutions that address shifting customer requirements and stricter environmental rules. A central element of that effort involves widening the speciality lineup, exemplified by added capacity for solution styrene butadiene rubber, a synthetic rubber that enhances durability, rolling resistance and tread wear in high-performance electric vehicle tyres.

Environmental initiatives form another pillar. Facilities built by the company can trap approximately 76,000 metric tonnes of carbon dioxide each year, while separately developed technology turns recycled acrylonitrile butadiene styrene sourced from scrapped household appliances into automotive-grade interior components that satisfy performance standards and generate fewer emissions than conventional methods. The group has also joined forces with POSCO Future M and BEI on anode-free lithium-metal battery development.

Parallel technology-focused programmes are underway at affiliated units. Kumho P&B Chemicals is formulating water-based epoxy resins that curb volatile organic compound releases while incorporating more bio-based inputs to reduce carbon intensity. Kumho Mitsui Chemicals is advancing bio-based polyurethane systems and electric vehicle materials, alongside debottlenecking work to add 100,000 tonnes of annual methylene diphenyl diisocyanate capacity. Kumho Polychem, meanwhile, is targeting ethylene propylene diene monomer through low-temperature polymerisation paired with energy-efficiency improvements.

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Birla Carbon has confirmed a price increase of up to 15 percent for its Speciality Materials products across Asia, scheduled to take effect on 1 October 2026. The company pointed to significant and sustained rises in feedstock costs, driven partly by ongoing geopolitical instability and disruptions in global feedstock markets, as the reason behind the adjustment.

Although Birla Carbon pursued operational efficiencies, supply chain optimisation and disciplined cost management to soften the impact, the scale and persistence of the cost escalation left a price adjustment unavoidable. The company's sales teams will engage customers directly to explain the details and help them navigate the transition.

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