Almost a third of procurement professionals expect prices for specialized chemicals and chemical additives to increase by more than 10% during the third quarter, according to the latest survey from the Chartered Institute of Procurement and Supply.
Conditions have become especially difficult for lubricant producers since the outbreak of war involving Iran, Israel and the United States disrupted energy production and shipping across the Middle East. Traffic through the Strait of Hormuz, the narrow waterway linking the Persian Gulf with the Gulf of Oman, fell sharply after the conflict began. Before the war, the route handled around one-fifth of global oil and gas flows. Vessel movements remain far below previous levels, despite some crude and commodity cargoes passing through the strait.
The CIPS Pulse Survey is a quarterly global report recording the sentiment, cost pressures and risk perceptions among procurement and supply chain professionals globally.
The prospect of another sharp rise in additive costs comes as lubricant blenders are absorbing higher prices for base oil, especially API Group III, which scarce.
Concern about supply chains more broadly is close to record levels. CIPS said short-term anxiety over shortages and disruption eased to 4.95 on its seven-point scale during the second quarter, from a record 5.69 in the first quarter. The latest reading remains higher than every other quarterly result recorded during the previous two and a half years. Longer-term anxiety stood at 5.0, the third-highest reading in the survey’s history.
“The easing in short-term anxiety should not be misread as a return to normality,” CIPS’ chief economist John Glen said. “The direction of travel may have softened, but the level of concern remains elevated.”