Helping Businesses Overcome The Supply Crisis Faced In The Rubber Industry

$40.77 billion*. That’s how much the global rubber industry was worth in 2019. Then COVID-19 came and conquered, sending multiple rubber-based businesses into a frenzy. The industry is still recovering from that onslaught.

Nevertheless, the rubber industry is known for showing resilience in face of adversity. The industry is expected to touch $51.21 billion* by 2027 with a CAGR of 5.3% for the 2020-27 period.

Stakeholders in the industry were looking to recover swiftly from the side-effects of the pandemic when they were affected by the disruptions due to global supply.

There are many reasons for these disruptions. One of the reasons is because rubber derivatives such as FKM/Viton™ and silicone are in short supply. There is a rising demand for these rubber products but supply chains for rubber-based raw materials continue to be hit. Let’s not forget that the pandemic also led to a massive demand for silicone-based products such as healthcare elastomers. All of this has ensured that it will take some time for the industry to return back to normal.

Some other reasons for the supply concerns include the following:

1. The sanctions imposed on Russia

Carbon black is an important component of several rubber compounds while oil and gas is critical to produce many polymers. Russia supplies roughly 30% of the global supply for both these raw materials. The sanctions imposed on Russia has resulted in huge price hikes and material shortages across the globe.

2. China’s energy crisis

China is facing an energy crisis that has led to blackouts for most of their energy-based industries. Since a bulk of the world’s silicone stock is from China and with their plants running at restricted capacity, there is a shortage of silicone compounds that has hit the supply chain big time.

3. The impact of 3M

3M plays a critical role in the rubber supply chain globally. Its closure of a European site has resulted in severe shortage of critical ingredients used to produce FKM and FFKM. 3M has also stopped supply from one of their important Russian plants, restricting material availability even further.

4. Competition with other industries

R142b gas is an important component of FKM and the inability to scale up production has impacted the rubber industry. There is a huge demand for R142b gas from other industries as well. For example, the electrification of vehicles has led to a massive demand for lithium batteries. With industries competing for R142b gas as a critical component, the hope is that global producers can increase capacity soon to meet demand.

The uncertainty around the availability of raw materials will continue for the most part of 2023, especially for FKM and FFKM. The unavailability coupled with the huge hike in prices is impacting the manner in which businesses are run.  There is going to be a severe shortage for these materials in the coming months.

At Harkesh Rubber, we have a steady supply of raw materials to meet your demands for FKM and FFKM. If you are facing a supply crisis, then you should get in touch with our team by calling us at +91-22-40060400 or sending an email to contact@harkeshrubber.com. Together, we can overcome the uncertainties that cloud the rubber industry!

Reference

* Rubber Market Size, Industry Share, Outlook [2020-2027] (fortunebusinessinsights.com)