Based on the latest reports, the worldwide demand for industrial rubber products will grow by 6.6 percent by next year to become a $158 billion-dollar industry. This growth is primarily due to the output of expanding durable goods and an acceleration in fixed investment expenditures. Certain factors will continue to play a key role in the cost of industrial rubber supply products.
Each year, some 18 million tons of solid and liquid rubber are used globally to produce industrial rubber supply products. Of these, natural rubber remains the largest contributor. One factor influencing the price of rubber is a healthier global economy. When the economy was struggling, prices dropped; however, now that supply has increased and continues to grow, the once low prices have started to climb.
Another reason for the increasing cost of rubber is that more industries rely on it. Specific to the industrial market, the thriving automotive industry, increased manufacturing activities, and strong construction markets are big driving forces for production and use, which impact price. Even the aerospace sector has increased its demand for rubber products.
The increasing cost of labor, along with energy and transportation, is also impacting prices within the industrial rubber market. For instance, over the past 10 years, the bull market in energy commodities has contributed to a huge increase in the cost of transportation for manufacturers with supply chains around the world. Exporting rubber also affects the cost. The decline of the U.S. dollar has put the country in a more competitive position to manufacture for exports.
In both the U.S. and China, there is a very narrow gap between higher education and training. Although it is likely that the U.S. will maintain its advantage and stay competitive, strengthening the U.S. labor force through the industrial rubber market means that more money will need to be shelled out to advance skills of manufacturers.
Taxes also influence the price of industrial rubber: The U.S. has the highest statutory corporate tax rate among all developed countries. Even so, talk of reform continues with the possibility of the R&D tax credit becoming permanent; if and how the rubber industry is affected by a tax reform would dictate a change in pricing.
Today, manufacturing companies, like RPM Industries, Inc., use state-of-the-art machinery and advanced technologies that produce greater quality output. That means there is a much faster turnaround for products, which also has an influence on price. To learn more about our industrial rubber products please visit our website or contact us by phone.