Alarm bells sound for French rubber industry

Vitry-sur-Seine, France – Many suppliers of rubber components to the automotive sector in France are highly concerned about their business outlook, according to the Syndicat National du Caoutchouc et des Polymères (SNCP).

In an annual review, the French rubber industry association said that, unlike most other industries, the automotive sector did not experience a recovery in production or registrations in 2021.

Meanwhile, it noted, soaring production costs and the extreme difficulty passing on these costs took a heavy toll on margins already damaged by the 2020 pandemic.

‘Companies producing technical rubber parts for the automotive industry are very worried about their future,’ according to the 15 Feb report from SNCP.

With regard to the semiconductor shortages impacting the global automotive industry, the association said the situation was not forecast to improve significantly in the first half of 2022.

As a consequence, orders for automotive rubber parts have been ‘both limited and subject, particularly in the fall of 2021, to brutal and sudden revisions… even cancellations,” reported SNCP.

Looking at production costs, SNCP said the situation at the start of 2022 was ‘far from being normalised’ particularly as the energy crisis in autumn had complicated an already difficult situation.

European prices for gas – an essential energy for the manufacture of many synthetic rubbers – increased more than six-fold between fourth quarter 2021 and 2019.

The rubber processing industry was very heavily impacted as raw materials represent between 30% and 50% of the average cost price of automotive parts, said SNCP.

Comparing first quarter prices for raw materials in 2022, with those of the same period last year, SNCP reported increases of: 35% for styrene butadiene rubber; 60% for oil-extended EDPM; 57% for nitrile rubber and 38% for carbon black.

SNCP went on to warn that, after two very difficult years, many business leaders will ‘not be able to hold out any longer’ particularly given the inability to offset increases in the cost of raw materials.

‘This weakening of the fabric of French and European suppliers of rubber parts does not bode well for the essential adaptation of companies to the… the accelerated ramp-up of the electric vehicle,’ said SNCP.

Moreover, concluded the French rubber association, the situation ‘exposes France and Europe to excessive dependence on overseas suppliers.’