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Market Study: Supply of Raw Materials Companies Apprehend Threats to Raw Material Supply

Editor: Janina Seit

Corporate managers in Germany, Austria and Switzerland are concerned: They fear that the supply of raw materials is in jeopardy and that the price of raw materials will rise. Uncertainties caused by global political developments and potential trade restrictions also cause concerns. These are the results of the latest raw material study published by the management consultants of Inverto.

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Three quarters of the 90 participants of the Inverto Raw Material Study 2017 expect raw material prices to rise.
Three quarters of the 90 participants of the Inverto Raw Material Study 2017 expect raw material prices to rise.
(Source: Pixabay / CC0 )

Three quarters of the 90 participants of the Inverto Raw Material Study 2017 expect raw material prices to rise. In addition, the declining availability of raw materials is a decisive external factor influencing this year’s business results. Only 10 % of the participants do not expect any supply problems at present or in future, compared to 25 % in 2016. Especially traditional industrial raw materials such as metals, plastics and chemicals, which are highly relevant for 81 % of the companies, are an issue. Uncertainty concerning the future development of raw material prices also has an impact on new contracts. Companies are mainly trying to secure fixed prices, but the time periods accepted by suppliers continue to get shorter. Purchasing on the spot market is used to a much lesser extent than in the previous year.

Alternative Procurement Markets to Cover Demands

Most of the participants in the study see a threat to raw material procurement in trade restrictions. 56 % expect supply bottlenecks and associated price increases to be the case. Only one third purchases the raw materials from other EU countries and are therefore not afraid of any negative impact on their raw materials supplies. 52 % of the managers questioned in the study expect restrictive measures to be imposed from China, a source of raw materials for just under 80 % of the companies surveyed. Trade restrictions are also expected to be imposed by Russia (48 %), the USA (41 %) and Turkey (34 %). More than 80 % of the respondents try to protect themselves from these risks by fully or partially shifting their procurements to alternative markets. In addition, companies react to protectionism by switching suppliers (58 %) and considering alternative raw materials (42 %).

Companies do not Tap the Full Potential of Digitization

Digitization also has an increasing influence on the procurement and management of raw materials, although the opportunities it offers are not yet fully exploited. Although 42 % of the companies surveyed think that it would be sensible to use Business Intelligence tools, only one-fifth of the companies actually use them. Thanks to digitization, 40 % of the companies were able to optimize their manufacturing processes in terms of material efficiency. On the other hand, more than half still believe that digitization will have no influence on their own raw material demands.

Inverto's annual raw material study examines how companies assess the development of raw material prices and supply situation and what measures they take to protect themselves from these risks. Again, more than 90 managing directors, board members and purchasing managers from Germany, Austria and Switzerland were interviewed. The study was conducted for the eighth time in 2017.

This article was first published by Schweizer MaschinenMarkt. Executive editor: Tobias Hüser.

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