Rising raw material prices put German rubber industry at 'load limit'

FRANKFURT, Germany—The German Rubber Manufacturers Association (WDK) has warned that an anticipated "explosion" in raw materials prices threatens the existence of many players in the sector, which has already reached a "load limit."

The association's chief economist, Michael Berthel, forecast further price increases for rubber raw materials in the second quarter of 2022 despite the current "extremely high level" of pricing, according to an April 12 news release.

Compared to March, prices for styrene-butadiene rubber, nitrile rubber, fluoroelastomers, EPDM and silicones have this month risen by between 10 percent and 18 percent, Berthel said.

Compared to last year, which was already highly priced in comparison with prior years, the level of price increases goes beyond 40 percent and up to 75 percent, he added.

In addition, the economist noted a "huge price increase" of 20 percent for carbon black and 30 percent for chemicals and oils in April alone.

"At the beginning of the second quarter of 2022, WDK data consistently show double-digit growth rates in the costs of raw materials used in rubber processing," he said.

Also commenting, WDK Managing Director Boris Engelhardt described the development as a "triple burden" on the industry—the pressure of higher raw materials prices adding to doubled energy costs and expensive logistics services.

"Already now, every second company in the rubber industry has to forego any margin on its products, and 15 percent of the companies are already drawing on their equity reserves," Engelhardt said.

While the increased costs are "non-negotiable" for large customers, such as the automotive industry, suppliers are faced with "austerity programs and unilateral risk transfers," the he added.

"An end to the price spiral is not in sight," Engelhardt warned, adding that the development could not go on in the long run.

Calling for government support, the official stated that further European Union sanctions against Russia will add to the woes of the industry.

"For a few days now, all rubbers and products made from (Russia) have been listed," Engelhardt said. "If carbon black and gas were to be added to the import index next, this could not be compensated for."