Rubber pricing review: A Fiat 500 for €100k?

London - Efforts among rubber processors to bolster supplies of synthetic rubber, carbon black and other compound ingredients are driving up prices across the entire market.

This feedback from ERJ’s latest survey of buyers - commenting off-the-record - suggests that since the Russian invasion of Ukraine on 24 Feb, the market has been “driven by fear” not facts. 

“There is enough feedstock and there is generally enough materials,” said one participant. “But the fear of not being able to supply makes companies take irrational decisions.”

As a result, he said, “overall pricing is exploding, [making it] difficult to sort the valid increases from the opportunistic ones.”

In this regard, for example, purchasers wanted greater clarity of the rationale behind the push by suppliers for “energy surcharges.” 

On a brighter note, there are expectations that things should at least start “to get back to normal” by the end of the third quarter of 2022.

An example here is the market for EPDM, which after several difficult months Is now said to be “available and prices are expected to be stable May onwards in Europe.” 

Purchasers linked the new-found stability in EPDM pricing to major European suppliers “getting their energy cost under control.” 

“There will certainly be some non-European sources that will try for further increase, said one commentator.

“But,” he added, “they will meet uninterested customers as stocks are high at all users and volumes are available on the market.”

Asked about ability to pass on increased materials costs in the main market segments, the feedback included: “Automotive, no chance: other markets, fairly successful.” 

“But levels are too high and unbalanced. So, for example, If EPDM is too high, customers switch to SBR etc.”

One interesting viewpoint was that a “crash of the market [was needed] to re-balance prices. With [current] trends, a Fiat 500 will soon cost €100,000, which no-one will be able to pay.”