How do you calculate a synthetic rubber price escalation clause using the PPI?
Divide the current value of BLS series WPU07110224 (Synthetic Rubber) by its value at contract signing, then apply that ratio to the synthetic rubber part of the price. Over the 12 months to September 2026 the ratio was 1.096. A usable clause also names an averaging window, a rule for revised values and missing months, and a cap.
A synthetic rubber escalation clause indexes the portion of the contract price tied to synthetic rubber to a published series instead of fixing it at signing. The benchmark is the BLS producer price index for Synthetic Rubber, series WPU07110224.
Synthetic rubber is a real input cost in tire compounding, seals and gaskets, and conveyor belting and hose work. Its price can move further over a contract term than a fixed-price contingency is built to absorb, so indexing it moves that risk onto the published series instead of onto one party.
What's specific to synthetic rubber
Synthetic rubber is made mainly from butadiene and styrene. Butadiene is a by-product of ethylene cracking, so its supply depends on what the crackers run, not only on crude oil. A clause for one compound such as SBR may need a more specific price than this broad series.
Synthetic Rubber, Including SBR and Ethylene Propylene against the WTI crude price, both set to 100 in the first month they share
Sep 2026WPU07110224 134WTI crude price 185
Sources: WPU07110224 (Synthetic Rubber, Including SBR and Ethylene Propylene); EIA via FRED, MCOILWTICO.
Since 2017, this index has followed the WTI crude price about one month later and moved about a third as far as it over a year.
Over the 12 months to Sep 2026, the WTI crude price rose 52.1% and this index rose 9.6%.
1 month
Lag behind the WTI crude price. Monthly changes line up best this far apart.
−18.3% to +33.2%
Range of 12-month changes since 2017.
20%
Share of months that moved more than 3%. The median month moved 1.34%.
The index follows oil only loosely, so an oil-linked clause and this index will often disagree. Pick one basis for the clause and do not mix them.
The calculation, step by step
Base index value. The index value at the base period, usually the month of contract signing or bid submission.
Current index value. The index value at the adjustment date, usually the month of delivery or invoicing.
Ratio. Current value divided by base value.
Adjustment. Apply the ratio to the portion of the contract price tied to synthetic rubber only.
Take a contract signed in September 2025 with $130,000 of synthetic rubber scope, invoiced in September 2026.
Base index, Sep 2025
200.586
Current index, Sep 2026 (revisable)
219.895
Ratio, 219.895 ÷ 200.586
1.0963
Amount at signing
$130,000
Adjustment added to that amount
+$12,514
Live figures from the stored series, updated when the provider publishes. Sep 2026 can still be revised, so a clause should say whether the invoice uses the first published value or is trued up later.
Where clauses go wrong
BLS publishes other series a synthetic rubber clause could be read against, and they do not move together. A clause that only says "the synthetic rubber index" leaves the two sides to pick different ones.
Over the 12 months to Sep 2026, these series moved differently. On the same $130,000, the gap between the highest and lowest is $10,780.
Write the series code, WPU07110224, into the contract text, with the BLS title next to it.
No rule for revised valuesBLS can revise each value for 4 months after it is first published. Right now that covers Jun 2026 to Sep 2026. Say whether the first published value is final for invoicing, or whether invoices are trued up once BLS revises it.
Divide the current value of BLS series WPU06790918 (Carbon Black) by its value at contract signing, then apply that ratio to the carbon black part of the price. A usable clause also names an averaging window, a rule for revised values and missing months, and a cap.
Publication lag is the gap between the period an index measures and the date the statistics agency releases that number. BLS PPI data typically publishes within about two weeks of month end, commonly ten to fifteen days. If a clause does not name which release to use, both sides can end up applying different numbers on the same adjustment date.
A landed goods price stacks several stages: manufacturing cost, local freight, ocean or air freight, customs and duties, and service fees. Each moves on a different driver. The Incoterm sets which stages the seller even prices, so match the escalation clause to those stages individually instead of indexing the whole landed price to one number.