Prices are forecast to keep growing in the three years to 2017 as demand continues to rise because of economic growth and increases in input prices.
Los Angeles, CA (PRWEB) June 29, 2014
Explosives have a buyer power score of 2.4 out of 5. The buyer power score in this market is low, primarily due to the pricing model and low availability of substitutes. Buyers face limited leverage in negotiations due to the low differentiation in products and prices between suppliers. Explosive materials are required to perform identically if they are a comparable product regardless of the buyer, resulting in very similar manufacturing processes, cost structures and, ultimately, prices. “The price of explosive materials is mostly dependent on the cost of the manufacturing process and the price of chemical inputs necessary for production,” says IBISWorld procurement analyst Pierre Dessertenne. “Rising prices of raw materials that are required to make chemicals and the prices of the chemicals themselves have contributed to suppliers’ increasing production costs over the past three years.” The increase in costs has been passed down to buyers. Over the next three years, prices are expected to continue growing albeit at a reduced rate because of a decreasing cost of inputs and stagnating wages.
Demand for explosives is estimated to have increased in the three years to 2014, mainly because the copper, oil, iron and coal mining industries have had greater production needs as economies grow worldwide. “The increased activity in these industries has helped raise market prices and the production of explosive materials, especially blasting agents, which are an essential part of mining operations,” adds Dessertenne. Major vendors of explosives include Orica Limited, Incitec Pivot Limited, Austin Powder and Maxam North America Inc.
Explosive materials tend to have a limited shelf life, especially the most commonly used types; therefore, buying large quantities of explosive materials to avoid future price increases is rarely an option. If blasting is not a recurring business operating expense, buyers of explosives should consider hiring a blasting service provider to limit the total cost of ownership. Buyers should also consider all local regulation of the area where the explosives will be used because meeting these legal requirements can inflate the total cost of ownership and price. For more information, visit IBISWorld’s Explosives procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of explosives. Explosives are reactive substances that contain a great amount of potential energy and create a powerful, destructive force when released. This report focuses on the commercial use of blasting agents and explosives, along with an overview of blasting services. It does not cover the use of explosives for defense purposes.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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