As we enter January, it’s time to think about 2023 and peer into our rubber industry crystal ball. Of course, it’s nearly impossible to accurately predict exactly what will happen this year, but we’ve been doing this a long time, and we’re confident that 2023 will be a year of change for the rubber industry.
Our industry is expected to grow steadily over the next ten years or so, but there are several things that could make 2023 a challenging year, like supply chain issues and future regulations.
Here are 4 trends we believe will impact the rubber industry in 2023.
The International Rubber Study Group (IRSG) forecasts that rubber demand will increase 2.8% in 2023, with 2.4% annual growth from 2023 to 2031. The study also shows that growth in demand for natural rubber will slow to 2.8% and natural rubber production will grow by 2.9% in 2023, and demand for synthetic rubber will drop to 2.8%, down from 11.1% in 2021.
For these reasons, the rubber market will tighten this year with a low rate of natural rubber replanting and plantation expansion.
Many economic experts believe that inflation will ease a bit in 2023, with most predicting the inflation rate to be between 3% – 4% by the end of 2023. The inflation rate for goods is declining, but the rate for services continues to grow. We expect most of 2023 to be like the second half of 2022, with rates around 5% – 6%
Supply chain issues emerged with COVID-19 global shutdowns and got worse with the war in Ukraine. These issues showed the fragility of the global economy, which works well – until it doesn’t. On the bright side, supply chain issues have shown that resilience is smart business; meaning that reducing dependence on imports and having alternative suppliers helps protect against volatile pricing, shortages, and rising shipping costs.
Consumers and investors are increasingly choosing to do business with companies with sustainability built into their business model. That includes end-users and business partners, so don’t be surprised to be asked more frequently about your company’s sustainability goals and activities.
In addition, the European Parliament is working to draft laws that regulate the responsibilities of companies for human rights violations and environmental damage along their entire supply chain. Typically, rules passed in Europe are eventually passed in the U.S.
That having been said, here are several strategies to help your business thrive in 2023:
The rubber industry has seen the cost advantage of sourcing product from overseas be eaten up by skyrocketing shipping costs, plus long delays that compromise already tight production schedules. Long shipping distances create a strain on the environment, so rethink your procurement tactics and focus on local sourcing (see Trend #4, Sustainability).
In supply chain management, responsiveness and flexibility are crucial, and fostering positive and mutually beneficial partnerships with suppliers can pay off when supply chain or inventory challenges occur.
Using a rubber supplier that mixes its own rubber and extrudes your component can eliminate potential supply chain disruptions. It also allows you to react and adapt quickly in case a material shortage requires a reformulation. Having a technically capable integrated rubber supplier means one less thing for you to worry about.
Watch the rubber market to get ahead of any potential issues or cost increases. These disruptions are typically predicted by market experts with a high degree of accuracy, but, you have to pay attention to the market.
What will happen in 2023? The future is yet to be written, but when you partner with Sperry & Rice, we’ll do everything it takes to ensure your project gets from concept to completion, and that it meets your exact standards and needs.
For more information on what’s happening in the rubber industry, make sure you follow Sperry & Rice on LinkedIn. If you have a project and need excellence, contact us here.