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Rubber Prices, Custom Fabrication, and Supply Chains

How Strong Is Your Supply Chain? How Strong Is Your Supply Chain?

Paulo Arruda Purchasing and Logistics at Elasto Proxy

Thailand, Malaysia, and Indonesia supply enough natural rubber to meet over two-thirds of the world’s demand for this plant-based elastomer. When rubber exports to China slowed, industry analysts worried that rubber plantations might put away their tapping knives and stop extracting latex from unprofitable trees. More recently, heavy rains in Southeast Asia caused a contraction in the supply of natural rubber, prompting fresh concerns about price increases.

Supply and Demand are Elastic

As with any global commodity, the price of natural rubber fluctuates. That’s also true of man-made or synthetic rubber, which is made by the polymerization of a variety of petroleum-based precursors called monomers. When crude oil prices topped $100 (USD) per barrel and analysts worried about “peak oil,” elastomers such as styrene-butadiene rubbers (SBR) were more expensive to produce. More recently, oil prices have plummeted, a trend with implications for the world marketplace for petroleum products.

Meanwhile, global demand for rubber continues to grow. China’s current rate of economic growth isn’t as strong as it was in 2011, but that doesn’t mean the country’s gross domestic product (GDP) is falling. In fact, global demand for industrial rubber products is expected to rise by 6.6% per year through 2018, with more than half this demand coming from China. Tire manufacturing consumes much of the world’s rubber supply, but demand for rubber seals and insulation is also strong and growing.

Macroeconomics and Microeconomics

What do these global trends mean for your company? What will your business do to minimize risks such as material shortages and significant price increases? By choosing a custom fabrication specialist with a strong supplier network, you can strengthen your supply chain and reliably source high-quality, cost-effective industrial rubber parts. That’s why manufacturers in many different market segments choose Elasto Proxy for specialty seals and custom insulation.

As a global supplier of low-to-medium volume quantities of industrial rubber products, Elasto Proxy works with suppliers from around the world. The semi-finished products that we buy come from compounders who share our commitment to meeting your application requirements and business needs. So whether you need extruded rubber profiles or molded rubber parts, our solutions providers can source the right rubber and custom-fabricate solutions that meet all of your specifications.

Leveraging Logistics

Choosing the right supply chain partner is important, but it’s only the first step. Once you’ve selected a custom fabrication specialist, how will you the make the most of the relationship? If the price of rubber is getting ready to rise, should you buy more materials now and have the custom fabricator store them? Not necessarily. Logistics isn’t that simple. There’s a lot to consider, but a trusted partner can help. Let’s consider a few general guidelines.

Consider all of your costs, including storage. Share projected usage with the vendor, and create a blanket order that lets your partner make the most of the best price. Some customers prefer to issue monthly releases, but this isn’t the most cost-effective approach if you know your projected monthly usage for the year. Blanket orders may represent a greater commitment, but these agreements enable the custom fabricator to order more material than just a minimum quantity when the price is right.

How Can We Help You?

Do you have questions about rubber prices, supply chains, custom fabrication, or logistics? For 25 years, Elasto Proxy has been working with companies in industries such as automotive, construction, defense, electronics, food equipment, green power, mass transit, medical equipment, and mobile specialty vehicles. How can we help you? Contact Elasto Proxy today.