Shock in the commodities market

Will the industrial market return to the same shape it used to have before the COVID-19 health crisis? There is no consensus: economists around the world admit they have no answers and the only truth is that we are experiencing a situation of inflation that was very difficult to foresee. Despite this structural crisis in the industrial supply chain, at Epidor SRT we have managed to maintain our usual stock and service levels. This is a huge challenge and we would like to thank our customers for their trust. In the following lines we will outline some of the difficulties we are facing in this unlikely scenario that we have had to live through.

The imbalance between demand and supply in the industrial market

Raw materials have become more expensive in a context in which the world economy has been convulsed by the pandemic. This crisis in the industrial market is the result of a perfect storm resulting from the confluence of demand and supply factors, as well as financial variables. The big problem we are facing is the imbalance between demand and supply that has emerged in 2021 in the industrial market. While activity is recovering, raw material supplying companies continue to have reduced or even stopped production for various reasons. In addition, the boom in demand and mobility restrictions due to COVID-19 collapsed global logistics and this situation has not yet been decongested. Here are some enlightening graphs on the evolution of rubber and transport prices in recent times.

We maintain a stable level of stock and services

As a result of the above, raw material prices have increased by as much as 40% in some cases, and lead times have become months instead of weeks. Currently, due to the closure of some plants, it is extremely difficult to find some raw materials such as silicone or FKM. We have no visibility of what will happen in 3 months' time, but the forecasts are not optimistic. In this situation, although we also suffer, having a high and stable stock, in addition to a local production and first level suppliers is a guarantee of continuity of service. At Epidor Seals & Rubber Technology we are fortunate to have a close relationship with our suppliers and after arduous negotiations we can say that we have a large stock of sealing solutions for industry. More than ever, collaboration with our customers is key, only an accurate forecast of their needs will allow us to ensure continuity of service, and until the situation allows it, we will continue working so that our customers can continue their activity without experiencing cuts in supply.