Silicone Rubber – Supply and Demand in 2019
Economics
Anyone using Silicone rubber based products is probably already aware of the massive increases being imposed by Global compound suppliers.
Increases of 40% seem to be the norm – with the basic economic law of Supply and Demand being to blame.
Above all, the inefficiency of the supply chain in not foreseeing the increase in demand is also to blame. As Silicone rubber becomes more widely used for household items such as Kitchenware for instance, demand is now outstripping supply. Consequently, we are now beginning to see these inevitable material shortages and price increases.
Prices at the sharp end
What does this mean to the OEM or end-user?
This depends on the specification and material content of the product you are buying. The % cost of the component related directly to raw material, excluding production costs and profit margin will effect the price.
With a base material increase of 40%, we are seeing products in their identical form, increasing by anywhere between 20% down to 6%.
Where we can switch compounders – ironically bringing material in from plants in the Far East for instance, we have been able to maintain costs. In some cases prices are actually reduced.
What can you do?
If the product is critical for your application, unfortunately, there’s very little you can do, everyone’s in the same situation.
Certainly, if your material is over-specified and an alternative can possibly be used, now might be the time to consider changing. Although for mouldings and extrusions, new tooling will almost certainly be necessary – it may be cheaper in the long-run.
We can certainly help to identify alternative materials – or even alternative methods of manufacture to help minimise any increases. We work daily with customers on ways to reduce costs, and as an SME without a board of governors or shareholders to pay, pass on any savings we can make directly to our customers.
Finally, now might be the time to consider us as an alternative supplier! Call now – what do you have to lose?
