Rubber hit as Middle East war drives supply chain pressures to three-year high

Clark, New Jersey – Rubber has been named among the materials facing tightening availability as global supply chain pressures reached a three-year high in March, driven by disruption linked to the Middle East war.

According to the latest GEP ‘global supply chain volatility index’, monthly index "rose sharply" to 0.57 in March from 0.09 in February, its highest level since January 2023.

A reading above zero indicates supply chains are under strain, explained GEP in a 10 April report.

GEP said the conflict has triggered an “energy price shock and maritime disruption,” pushing manufacturers to increase safety stockpiling while cutting purchasing volumes.

Shortages have emerged despite softer demand, signalling bottlenecks across supply chains.

Availability of key inputs including “polymers, PVC and rubber,” as well as energy-intensive metals such as aluminium and copper, “deteriorated the most,” the report said.

At the same time, surging oil prices drove global transportation costs to a four-year high in March, adding to cost pressures across regions.

“The war is pushing up costs, triggering stockpiling and creating shortages across supply chains,” said Mukund Acharya, VP, consulting at GEP.

However, he added that the disruption “has not yet escalated into a broad-based shock that materially slows global economic growth.”

According to the GEP report, manufacturers globally responded to the Middle East developments by building inventory buffers at the 'highest rate' in three years, with Europe reporting the most aggressive stockpiling activity.

The trend reflects efforts to secure supply amid rising prices and ongoing uncertainty.

Regionally, Asia saw the sharpest increase in pressure, with its index jumping to 1.16 in March from 0.40 in February, the highest rise since August 2022, driven in part by reliance on Middle East oil.

North America’s index rose to 0.42, a 39-month high, while Europe climbed to 0.64, signalling the strongest strain since January 2023.

The UK also moved into positive territory at 0.16, pointing to “emergence of supply bottlenecks.”

Global input demand indicator weakened during the month, after reaching to its "strongest level in four years in February."

Factories, said the report scaled back purchases of raw materials and intermediate goods, particularly in Asia.

In contrast, purchasing "picked up slightly" in North America and Europe, supported by precautionary stockpiling ahead of further expected disruption.

Reports of material shortages reached their highest level since April 2023, signalling "an immediate emergence of bottlenecks across global supply chains following the outbreak of war in the Middle East."

Meanwhile, labour-related backlogs also edged up to 'slightly above historical average', according to the report.

The GEP report recommended that companies should secure supply "where it matters most" while avoiding broad stockpiling that can lock in higher costs.

The GEP global supply chain volatility index is produced by S&P Global and GEP and is based on a survey of 27,000 businesses.