From the desk of Steve Anton, President of Rahco Rubber, Inc.
I hope that this communication finds you in good health.
Without our business partners, we fail to exist. This mindset is ever-present whether we are working in the lab to enhance a current formulation or developing a new one, when supporting a customer’s product engineering team, analyzing lean manufacturing or automation opportunities, making capital investments, or when raising prices.
Nearly all of our customers have received a new price notification, if not more over the past 30 months; none of which have been taken lightly by Rahco or without us sharing in some of the pain. Unfortunately, and quite simply, the demand for raw materials continues to outstrip their supply. Unfortunately, our industry intelligence suggests that even more challenging times lay ahead.
- Carbon Black (all grades) – Continental has scheduled the closing of a plant that produces 100,000,000lbs. Russian carbon black is clearly out of the market.
- The loss of Nitrile Butadiene Rubber (NBR) in the market was due to Zeon’s lawsuit.
- Exxon’s announced a 12% to 15% increase on their Vistalon™ EPDM line-up last week.
- Fluoroelastomer (FKM) polymers remain compromised due to R142b refrigerant reallocations.
- New “Energy” surcharges and increased shipping costs from offshore companies and added “Fuel” surcharges from domestic suppliers.
- All of which are affected by today’s global logistics crisis & geopolitical conflicts, the 40-year high inflation rates we’re experiencing, and soaring Brent Crude prices.
- German Chemical Industry association VCI – “production conditions within the German chemicals industry are “rapidly deteriorating” due to the ongoing war in the Ukraine” & “The situation is already threatening the existence of individual companies and the risk of having to cut production is increasing,”
Our vendors and tier I & II distributors remain at the mercy of their raw material manufacturers / global conglomerates, a.k.a. Shell Exon, BP, Arlanexo, etc. Allocations in today’s marketplace force us into a “pay at the pump” scenario or lose out. Quite honestly, I’ve never seen anything like this in my 45+ years in the industry.
Given today’s supply chain crisis, our first responsibility is to secure the specific raw materials for your custom compound(s). Secondly, we are committed to the identification of available offset ingredients and proactivity proposing solutions that meet your material’s performance specifications when Force Majeures or apportionments impact supply availability. Lastly, but certainly not any less important, we work to mitigate any negative economic impacts when possible.
With appreciation for your business,