Polyurethane Foam Procurement Category Market Research Report from IBISWorld has Been Updated

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Increases in the value of construction and the MCU and freight transportation service indices have boosted demand for polyurethane foam in the past three years, giving suppliers leverage to raise prices. For these reasons and to help procurement professionals make better buying decisions faster, business intelligence firm IBISWorld has updated a report on the procurement of Polyurethane Foam in its growing collection of procurement category market research reports.

IBISWorld procurement market research
The world price of crude oil is projected to rebound and drive suppliers' costs upward; meanwhile, demand for polyurethane foam is forecast to grow, accelerating price growth in the next three years.

The polyurethane foam market has a buyer power score of 2.6 out of 5, indicating that buyers are at a disadvantage when negotiating deals. The polyurethane foam market is highly concentrated, which diminishes buyers' ability to negotiate with market leaders such as Carpenter Co., FXI Foamex Innovations, Huntsman Corp. and The Dow Chemical Company. Moreover, polyurethane foam products are generally bulky and somewhat difficult transport, which boosts shipping rates. “Although there is a relatively large number of suppliers in the market, buyers are forced to choose from a small pool of nearby vendors or endure high shipping costs,” says IBISWorld procurement analyst Daniel Krohn. “These factors have a negative impact on buyers.”

Demand growth also contributes to low buyer power. Polyurethane foam is greatly used as insulation in construction applications, as well as cushioning and shipping material by manufacturers and freight shipping companies. Thus, demand rises in line with the value of construction and manufacturing capacity utilization (MCU), as well as freight transportation services indices. “These drivers have been trending upward as the economy has strengthened,” adds Krohn. “In turn, demand for polyurethane foam has swelled, giving suppliers additional pricing power.” Buyers will face increased difficulty negotiating as supplier pricing power rises.

Luckily for buyers, operational costs have fallen in the three years to 2015. During this period, increased oil drilling in the United States has elevated the world's oil supply. This trend has driven down the world price of crude oil. In turn, the prices of polyol and diisocyanate, which are crude oil derivatives and the primary inputs of polyurethane foam, have fallen. In response to falling input prices, supplier price flexibility has grown, making them somewhat more open to negotiations.

Nonetheless, operational costs are expected to rebound in the three years to 2018. During the forecast period, foreign oil suppliers are projected to curb their production in response to falling prices. In turn, oil prices will begin to slowly recover, causing polyurethane foam suppliers' operational costs to rise. Rising operational costs are expected to encourage suppliers to raise their prices at an accelerated rate, which will further erode buyer power. For more information, visit IBISWorld’s Polyurethane Foam procurement category market research report page.

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IBISWorld Procurement Report Key Topics

This report is intended to assist buyers of polyurethane foam, which is a flexible substance created from combining petroleum derivatives known as polyol and diisocyanate. Polyurethane foam has a wide is array of applications, including its use as cushioning in furniture and automobile seating, padding for shipped goods, as well as insulation for building and residential structures. It is also commonly used in the production of sponges for the medical field. However, this report focuses primarily on polyurethane foam that is used as insulation or padding for shipped goods and excludes all other foams and insulators, such as polystyrene and fiberglass.

Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics

About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld Inc.
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