Rubber & Plastics News compiled its 10 biggest stories from 2018, and we counted them down in our Dec. 10 print issue. We'll be running them online each workday until the end of the year.
3. Raw material volatility
Pricing for raw materials keep rising, and many industry companies have had to respond in kind by raising their own prices.
Virtually every major tire maker regularly increased prices on tires of all shapes and sizes, most of them citing raw material prices, with others calling out government policy decisions as the driving forces for the increases.
Butadiene prices remain the most volatile, dating back to 2017, Bill Hyde, IHS Markit senior director for olefins and elastomers, said earlier in the year. He added that the industry has overcome the effects of Hurricane Harvey.
Natural rubber demand keeps increasing, but prices still dropped thanks to oversupply. Thailand, Malaysia and Indonesia—three of the major NR producing countries—have tried to curb production to find a balance, but so far that has not been successful. Compounding the issue is that NR producers can't make a living at today's prices, so they have little incentive to curb production.
Hyde said later in the year that prices for synthetic rubber and petrochemical feedstocks remain "incredibly volatile" and are likely to remain so for the foreseeable future because ethylene production in Asia has lagged behind the U.S., resulting in higher prices for EPDM. Prices for ethylene topped out at $400 per ton, compared with $350 per ton in the U.S.—a discrepancy of more than 60 cents per pound and putting international suppliers at a major disadvantage.
The result? Suppliers like Kumho Polychem increasing prices for EPDM and others following suit, leading to a trickle-down effect throughout the industry.