Rising demand and expanding input costs have pressured the price of explosives upward
Los Angeles, CA (PRWEB) April 14, 2015
Explosives have a buyer power score of 2.5 out of 5, reflecting moderately low buyer negotiating power, primarily weakened by the market’s minimal competition among suppliers and a limited availability of substitutes. However, buyer power is aided slightly by the low cost of switching suppliers.
Several vendors dominate the explosives market; as such, market share concentration is high. The major suppliers, which include Austin Power, Hunting PLC, Incitec Pivot Limited, Maxam North America Inc. and Orica Limited, use their extensive capital and strong, established reputations to expand their presence across the market through consolidation and acquisitions, preventing smaller vendors from gaining market share. As a result, “competition in the market is low, which grants vendors stronger pricing leverage and weakens buyer power,” says IBISWorld research analyst Ian Buchanan. Furthermore, buyers have a limited availability of alternatives to explosives, consisting of nonexplosive demolition agents that are not as economical. Consequently, in most cases, buyers cannot use the availability of substitutes as leverage against suppliers during negotiations, further hampering buyer power.
One market characteristic in buyers’ favor is the ability to easily switch suppliers if necessary without running into many complications or costs. “Explosives are commonly purchased on an ad-hoc basis,” explains Buchanan. “As a result, buyers do not face any direct financial cost from changing suppliers.” However, buyers should be aware that suppliers located further away will charge higher transportation costs. Buyers that are under contract with a vendor will find that termination fees are uncommon, and when present, are often not severe enough to deter buyers from breaching the contract. Because buyers face little penalty in switching vendors, suppliers are pressured to offer incentives and renegotiate contracts to avoid losing clients, boosting buyer power.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 significant amount of potential energy and create a destructive force when released. Explosives include both high explosives and blasting agents. This report focuses on the commercial use of blasting agents and explosives. Common civilian applications for explosives include mining, demolition, land preparation and oil and gas extraction. Although explosives are frequently used by military agencies, military-grade explosives are not covered in this report. This report also excludes blasting services.
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.