Rising demand has marginally driven price growth; however, intense competition and falling input costs have inhibited price growth
Los Angeles, CA (PRWEB) April 04, 2015
Abrasives have a buyer power score of 2.9 out of 5, which indicates somewhat unfavorable negotiation conditions for buyers. According to IBISWorld analyst Cameron Roark, rising prices and a limited availability of substitutes weaken buyer power. Nevertheless, buyers benefit from low market share concentration and limited product specialization.
Abrasives coated with aluminum oxide represent the largest product category in this market; therefore, aluminum is one of the largest input costs for most manufacturers. Although the price of aluminum has fallen during the past three years in what is expected to be an over supply in market, this trend is expected to reverse, which will drive the price of aluminum up. The rise of key input costs will be transferred to buyers, leading to higher abrasive prices, continues Roark. Additionally, abrasives have few viable substitutes, which means buyers cannot leverage the availability of other products in negotiations.
However, not all market conditions hurt buyer power. Abrasives are not typically specialized, which means that most vendors in the market offer comparable products, making it easier for buyers to choose an appropriate vendor. The large number of vendors in the market forces suppliers to compete for market share, which further benefits buyer power. Players in this market include Home Depot Inc., Compagnie de Saint-Gobain and 3M Company. Buyers can look abroad at foreign vendors as well because an appreciating US dollar makes foreign abrasives cheaper. These factors combined place downward pressure on prices, keeping prices from rising at an even faster rate.
Overall, buyers can mitigate the low buyer power score by pinning the number of suppliers in the market against each other. Furthermore, buyers are encouraged to consider supply contracts in the face of growing prices and high price volatility. Supply contracts lock in prices, curb the risk of price fluctuations and secure supply. For more information, visit IBISWorld’s Abrasives procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of abrasives in the forms of papers, pads, cloths, discs, belts and blasters. Abrasives remove surface material on an object using force, typically through rubbing, grinding, polishing, sanding or blasting. Abrasives generally use a range of minerals to remove surface material. The appropriate mineral for the job is typically determined by gauging the hardness of the minerals using the Mohs scale of mineral hardness. This report does not include abrasive creams, abrasive pastes, compressors, soaps or solvents.
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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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.