Category Archives: Petrochemical Prices

How New Chinese Tariffs Impact Small-Mid Sized Manufacturers

Recently imposed Chinese tariffs on U.S. rubber imports will have significant impact on the small to medium American manufacturers that support industries such as automotive, medical equipment, petrochemical, and plastics. As part of an increasingly contentious trade war, the latest Chinese tariffs call for a 25% increase on an array of goods, such as those used in rubber and polymer component fabrication.

The Harmful Impacts of a Trade War on Small Businesses

Small- and mid-sized manufacturers in America specializing in rubber moldings, extrusions, and injection-molded parts will be forced to find ways to counteract the adverse effects of rising inflation on raw materials. Petroleum is a primary component for synthetic rubber and polymer production, so the most recent tariffs mounted by China will no doubt force small manufacturers to increase their prices to compensate.

In early June, the Trump administration launched its first wave of tariffs against Chinese-manufactured equipment, including the injection and transfer molding machines commonly used for extruded rubber and plastics. This has only compounded the difficulties of the situation for smaller manufacturers, causing them to seek alternate sources for the rubber fabrication machinery they rely on to create products and components. The long-term effects are expected to influence manufacturers serving in the custom and OEM markets, including those facing downward pressure from larger partners that have also been affected by tariffs from both sides.

In automotive production, rubber-based and plastic-based products such as gaskets, seals, brake pads, and tires are on the front lines. Medical equipment companies rely on custom extruded plastic tubing, pump parts, and device housings. With another round of 25% tariffs recently finalized by the Trump administration, small and custom manufacturers must brace for the additional escalations that will inevitably follow.

Plan Ahead, Avoid Potential Pitfalls

The trade war could potentially expand into industrial chemicals and fluoropolymers that are used in rubber gaskets and extruded plastic profiles, as well. Many of those materials are chemically formulated for high-temperature ranges, corrosion resistance, and anti-weathering, making them a crucial requirement for operations with harsh environments. A domino effect in pricing will no doubt impact buyers down the supply chain in a range of industries. Fortunately, however, many small business manufacturers are doing what they can by shifting resources to other markets, reducing production, and tightening profit margins.

Industry at UPR

At Universal Polymer & Rubber, our team is committed to staying on point for our clients, leveraging seasoned and innovative methods to ensure that we maintain the same service standards despite the trade war impact. We work hard every day to apply our years of small business manufacturing expertise to finding ways to ensure that our clients get their products on-time, within budget, and without sacrificing quality.

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Chaos and Uncertainty

Rubber MoldingChaos and uncertainty aren’t ideal conditions to operate in, but they’re facts of life in our business. To that end, we do everything we can to see our customers through to the other side.

This year has been an unpredictable one for us. Months that are typically busy have been slow, while historically slow months have been booming. In these tough economic times, everyone is cutting inventory. Many times companies aren’t placing orders to manufacturers until they get orders from their customers—and they want to make sure their customers don’t see any delay. It’s always a challenging position to work under the gun, and while we don’t prefer it, we’re here for our clients. In these unexpected busy periods we’ve come through.

Uncertain price points are also a reality. Here at universal we work with synthetic rubber. 75-80% of that rubber is petrochemical based—in other words, oil based. Ingredients such as polymers, process oils and carbon black are used to form the rubber compounds we work with, each ingredient with their own suppliers. Over the last ten years we’ve seen the number of those suppliers cut in half. Less suppliers means less competition, which means higher prices and increased price inelasticity. All of this leads to an aggravating situation: when oil prices go up, so do petrochemical prices, but when oil prices go down, petrochemical prices are slow to follow. Our clients see the news about falling oil prices and call to ask why we haven’t lowered our prices to match. And while we can’t make

While we can’t do anything to lower prices, we do everything we can to shield clients from sudden increases due to a rise in oil prices. We control all of the variables we can within our four walls to maintain consistent pricing.

So while the times aren’t ideal, the service you get from Universal Polymer and Rubber is. We’re here to get you top quality products when you need them, for a fair price.