Hexpol eyes rubber-compounds recovery amid automotive, energy transition

Malmo, Sweden — Hexpol expects demand for rubber compounding to recover in the coming years, supported by automotive electrification, infrastructure investment and increased outsourcing by customers, the group said in its 2025 annual report published 10 April.

While recent weakness in automotive markets had weighed on performance, the group pointed to “great future potential” as the shift to electric vehicles drives demand for advanced polymer compounds.

“The electrification of cars and other vehicles will drive up demand for advanced polymer compounds in large volumes,” forecast Hexpol, adding that it is “well equipped to meet this demand.”

Growth in the automotive sector is expected to be led by China, with the rubber compounds major “continuously reviewing opportunities for acquisitions or other expansion in the region.”

Beyond automotive, Hexpol highlighted opportunities in infrastructure and energy, where “large investments in solar and wind power are driving demand” for sealing, safety and insulation applications.

Hexpol also pointed to increasing potential to supply customers that currently produce compounds in-house, particularly in the US, where “many customers have older equipment and are affected by a general shortage of industrial workers.”

In such cases, the group said it can “relieve the burden by taking over production or contribute with extra capacity,” while also offering technically advanced compounds requiring special equipment and skills.

The market remains “highly fragmented with many small and local competitors,” continued Hexpol, adding that its ability to deliver “identical quality regardless of the manufacturing unit” is a key competitive factor.

Looking ahead, Hexpol plans to expand through organic growth and acquisitions, with a focus on Europe and North America, while also evaluating further expansion in China, India and Southeast Asia.

“In Europe and North America, the acquisition strategy will be selective with a focus on filling geographical gaps,” said the compounder, adding that targets "include businesses that expand its product portfolio or serve expanding industries."