As car manufacturers continue to battle with the global chip shortage and will likely do so for the rest of the year, another shortage is brewing, this time related to rubber.
Analysts warn that global rubber supplies are running critically short, in part due to increased demand for rubber gloves and packaging tape during the pandemic. Supply has also been hit by drought, floods, and a leaf disease in countries such as Vietnam and Thailand, which are leading producers of rubber.
Bloomberg notes that in addition to these changes in demand and supply for rubber, China went on a buying spree of rubber last year to bolster its national stockpile. The U.S. failed to follow suit. In February, natural rubber prices hit a four-year high of $2 a kilogram and the former chief executive of rubber firm Halycon Agri Corp, Robert Meyer, believes prices could hit $5 per kilogram within the next five years.
Read Also: Intel Could Produce Microchips For American Automakers Within 6 To 9 Months
“The supply issues that we’re seeing now, they are structural,” Meyers told Bloomberg. “They will not change very soon.”
Commenting on the shortage, Ford and Stellantis confirmed they are monitoring the shortage but haven’t yet felt its impact. Similarly, General Motors says it isn’t worried about its rubber supply at this stage. Michelin added it is skirting port congestion by using air freight shipments from Asia.
“It’s definitely tightening up,” a spokesperson from automotive part manufacturer representative Foley and Lardner LLP said. “It’s nowhere near the level of the chip shortage from our perspective so far, but it’s definitely brewing.”
“It’s like paper towels early on during the COVID crisis,” added head of consulting firm Conway MacKenzie Steve Wybo. “If you can get your hands on some plastic, or some rubber, you’re going to order more than you need because you don’t know when you’re going to be able to get it next.”
