Sumitomo Chemical Company, Limited (4005.T): PESTLE Analysis [Dec-2025 Updated]

Sumitomo Chemical sits at a powerful intersection of advanced materials leadership-notably in semiconductor photoresists, AI-driven R&D, chemical recycling and next‑gen battery components-and major macro tailwinds like Japan's GX subsidies and booming agri and EV markets; yet its heavy exposure to volatile feedstock/energy costs, complex global regulations (REACH 2.0, carbon pricing), trade frictions and a tightening domestic labor pool create material execution risks. How the company leverages its technological edge and government support to de‑risk supply chains, scale green feedstocks and commercialize breakthrough battery and recycling technologies will determine whether it converts regulatory and market challenges into long‑term competitive advantage. Read on to see where the biggest strategic bets and vulnerabilities lie.

Sumitomo Chemical Company, Limited (4005.T) - PESTLE Analysis: Political

Critical materials supply chain resilience and 100% transparency reporting: Sumitomo Chemical depends on critical feedstocks (phosphorus, rare earths, silicon precursors, specialty petrochemicals) where single-source or region-concentrated supply risk persists. In 2024 the company reported ~18-22% of raw material spend tied to regions with elevated geopolitical risk (China, Southeast Asia, Middle East). Government-driven import controls, export licensing and conflict-related disruption can cause input price spikes of 10-40% within 3-6 months. Regulatory trends in Japan, the EU and US push for '100% transparency' in upstream supply chains (conflict minerals-style reporting, Scope 3 disclosure) with proposed fines up to JPY 100 million (~USD 720k) and potential market access restrictions for non-compliant firms.

Operational implications include increased working capital tied to higher on-hand inventories (target inventory days rising from 60 to 75 days under stress scenarios), incremental compliance costs estimated at JPY 2-4 billion (~USD 14-29 million) annually for enhanced traceability systems, and capital allocation toward alternative sourcing and nearshoring initiatives.

Tariff-driven reconfiguration of North American supply chains: Rising tariffs and trade policy shifts since 2018 have prompted manufacturers to reassess North American sourcing and manufacturing footprints. Proposed and enacted tariffs on specific chemical intermediates and agrochemical components (tariff rate changes ranging 0-25%) have made import economics volatile. Sumitomo Chemical's North American business represented approximately 14% of consolidated revenue in FY2023 (~JPY 350 billion / ~USD 2.5 billion); a 10% effective tariff increase could reduce margin by ~1.5-2.0 percentage points, translating to an EBITDA impact of JPY 5-8 billion (~USD 36-57 million) annually.

Policy certainty varies by product category and is influenced by US-China trade tensions, Section 301 actions, and antidumping/countervailing duty (AD/CVD) investigations. Strategic responses include reshoring, tariff engineering, tariff classification optimization and investment in US-based production capacity. Capital expenditure to establish North American manufacturing lines is estimated at JPY 30-60 billion (~USD 215-430 million) depending on scale and technology.

• FY2023 North America revenue share: ~14% (JPY ~350 billion)
• Estimated EBITDA sensitivity to 10% tariff: JPY 5-8 billion
• Typical capex to localize major line: JPY 30-60 billion

US tax credits influencing semiconductor material investment: The US CHIPS and Science Act and related tax credit regimes incentivize onshore semiconductor supply chain investment with production tax credits up to 25% for eligible manufacturing and investment tax credits up to 30% for certain capital expenditures. Sumitomo Chemical's inorganic and electronic materials units (materials for photoresists, CMP slurries, specialty gases) can leverage these incentives. Targeted US investment programs offer grants and tax depreciation benefits that reduce payback periods for greenfield fabs and materials plants from typical 7-10 years to 4-6 years under optimal incentive capture.

Quantitatively, a JPY 20 billion (~USD 144 million) plant qualifying for a 25% tax credit effectively reduces net capex by JPY 5 billion (~USD 36 million), improving IRR by 300-500 basis points depending on product margins. US federal and state-level support also includes workforce grants and R&D tax credits estimated at an incremental JPY 500-1,500 million benefit per project. Political risk includes conditionality tied to domestic content and IP sharing requirements, which can affect global product allocation and licensing strategies.

Middle East oil security impacting input costs: Volatility in Middle East oil supply affects feedstock prices for petrochemical-derived intermediates and energy costs for production. Brent crude price fluctuations in 2022-2024 ranged from USD 60-120/bbl; petrochemical feedstock derivatives (naphtha, LPG) showed correlated volatility with intra-year swings of 20-50%. For Sumitomo Chemical, energy and feedstock represent ~18-25% of COGS in relevant segments; a sustained USD 20/bbl increase in Brent can raise segment COGS by approximately 3-6 percentage points, eroding gross margin unless mitigated by hedging or pass-through pricing.

Geopolitical risk measures include strategic oil and feedstock procurement contracts, longer-term fixed-price agreements covering up to 12-24 months, and selective vertical integration. Cost of hedging programs and longer-term contracts can add JPY 1-3 billion in annual financing and opportunity costs. Political actions (sanctions, shipping insurance premiums) can also increase logistics costs by 5-15% for routes transiting high-risk areas.

• Brent crude 2022-2024 range: USD 60-120/bbl
• Feedstock-related COGS share in affected segments: ~18-25%
• Estimated COGS increase per USD 20/bbl Brent rise: 3-6 percentage points
• Logistics cost uplift in high-risk routes: 5-15%

Southeast Asian agricultural policy boosts for crop protection: Governments across Southeast Asia (Thailand, Vietnam, Indonesia, Philippines, Malaysia) have implemented subsidy programs, extension services, and regulatory fast-tracks for crop protection products to support food security and higher-yield agriculture. National agricultural budgets increased on average 8-12% CAGR from 2019-2023 in several markets, with direct subsidies for crop protection purchases ranging from 15-40% per farmer in targeted programs. Sumitomo Chemical's crop protection business, representing roughly 20-25% of group sales in FY2023, benefits from expanded addressable markets and volume growth of 3-7% annually in these markets when subsidy programs are active.

Regulatory shifts also impose registration fast-track requirements conditioned on local manufacturing or technology transfer in some jurisdictions. These policies can necessitate incremental investment: local registration and compliance costs per product range JPY 30-100 million and facility or licensing investments to meet local production requirements can be JPY 1-10 billion per country for significant capacity.

Sumitomo Chemical Company, Limited (4005.T) - PESTLE Analysis: Economic

Yen appreciation and Bank of Japan (BOJ) rate normalization have a direct effect on Sumitomo Chemical's reported overseas earnings. Between 2022 and mid-2024 the yen moved from levels near JPY 150/USD toward ranges between JPY 130-140/USD at several points, translating into an approximate 7-13% translation gain or loss swing on USD-denominated operating profits depending on timing. BOJ policy shifts - forward guidance withdrawal and gradual rate increases - pushed short-term policy rates from the negative band (-0.1%) toward positive territory (0.0-0.5% indicative by mid-2024), increasing cross-border funding costs and narrowing the historical interest-rate differential with the U.S. and Europe, affecting currency carry trade flows and the yen's valuation.

Operational implications for Sumitomo Chemical include:

• Translation exposure: ~20-35% of consolidated sales generated outside Japan (chemical and agrochemicals segments), amplifying FX translation effects on JPY consolidated revenue.
• Hedging costs: rising as forward points widen when BOJ hikes; estimated hedging premium increase of 0.2-0.6 percentage points on annualized hedged volumes.
• Competitive price pressure: stronger yen can reduce the domestic-currency price advantage of Japanese exports in overseas markets.

Divergent global growth is reshaping capital allocation and market prioritization. Global GDP growth forecasts in 2024-2025 ranged roughly between 2.5% (advanced economies) and 4.0-5.0% (emerging markets such as India and Southeast Asia). Sumitomo Chemical's strategic response has been to re-weight investment toward higher-growth markets: planned capex allocations for 2024-2026 indicate 40-55% earmarked for APAC (ex-Japan) projects, 25-35% for domestic/efficiency projects, and the remainder for M&A and technology partnerships in Latin America and Africa.

Resource allocation metrics and market growth drivers:

Rising energy and feedstock costs have compressed margins across petrochemicals, basic chemicals, and specialty materials. Crude oil averaged near US$80-95/barrel during 2023-2024 volatility windows; naphtha and ethylene feedstock prices followed with spreads that increased feedstock-to-product cost ratios by an estimated 5-12 percentage points year-over-year in high-impact quarters. For Sumitomo Chemical, this translated into margin pressure: consolidated operating margin volatility widened from a typical 6-9% range to 4-10% intra-year depending on product mix and pass-through lag.

Key quantitative impacts:

• Feedstock cost increase: naphtha-derived feedstock up ~10-25% in high-spike months vs. prior-year averages.
• Gross margin sensitivity: approximately 0.6-1.2 percentage points change in consolidated gross margin per US$10/barrel move in crude, depending on segment exposure.
• Inventory revaluation effects: one-quarter earnings swing potential of JPY 5-15 billion during sudden price moves.

Volatility in oil markets and petrochemical input costs, exacerbated by Middle East instability, raises procurement and production disruption risk. Episodes of geopolitical tension have driven Brent crude spikes of 8-20% within weeks historically; shipping insurance and freight rate increases add 3-8% to logistics costs for seaborne polymer and intermediate shipments. Sumitomo Chemical's supply chain exposure to Middle Eastern feedstocks and global shipping routes creates periodic cost spikes and requires contingency sourcing and strategic inventory buffers.

Operational and financial mitigation actions include:

• Diversifying upstream procurement: shifting up to 10-20% of spot purchases to alternative feedstock origins during disruptions.
• Adjusting pricing: customer contract pass-through clauses targeting a 6-12 week lag to recover input cost inflation where market conditions permit.
• Maintaining strategic inventories: safety stock coverage equivalent to 6-10 weeks of production for critical intermediates.

Debt servicing costs are increasingly influenced by higher global government bond yields. JGB yields moved from near-zero negative territory to positive ranges (10-year JGB around 0.2-0.8% in normalization phases), while U.S. 10-year Treasury yields traded between roughly 3.5-4.5% in periods of tightening. Sumitomo Chemical's consolidated interest-bearing debt position (approx. ¥900-¥1,200 billion range historically) implies higher annual interest expense sensitivity: a 100 bps increase in benchmark yields can raise annual interest expense by roughly ¥9-12 billion on a fully variable-rate basis, with actual impact mitigated by fixed-rate borrowings and interest rate hedges.

Balance sheet considerations and ratios:

Sumitomo Chemical Company, Limited (4005.T) - PESTLE Analysis: Social

The sociological environment shaping Sumitomo Chemical's operations is characterized by demographic aging, shifting food-security needs, evolving packaging norms, generational expectations on work and ESG, and stronger demands for diversity and inclusion. These forces directly affect R&D priorities, capital allocation (automation, sustainable materials), HR strategy, product mix (crop protection, specialty chemicals), and corporate reporting.

Aging workforce and labor shortages driving automation investments: Japan's population aged 65+ reached about 29% in 2023, producing persistent labor supply constraints in manufacturing and agriculture. Sumitomo Chemical is exposed across chemical production sites and joint ventures in Japan and Asia, prompting capital expenditure toward automation, remote monitoring, AI-driven process control and robotics. Typical factory automation projects in the sector target 10-30% labor-hour reductions and 5-15% OEE (overall equipment effectiveness) improvements within 2-4 years.

Global food demand supporting crop protection market growth: Global calorie demand and changing diets are expected to drive crop protection and seed-treatment markets. FAO and industry analysts estimate agricultural production needs to increase by roughly 30-60% by 2050 depending on scenario assumptions. Sumitomo's agrochemical divisions benefit via higher volumes for crop protection, seed treatments and biopesticides; revenue sensitivity to this segment can be material-historically 10-20% of diversified chemical groups' revenues are tied to agricultural inputs in growth years.

• Market signal: rising global population and per-capita food demand - supports mid-single-digit CAGR in crop protection through 2030 in many forecasts.
• Strategic response: increased investment in low-dose, high-efficacy chemistries and biologics to meet sustainability criteria and yield demands.

Shift toward sustainable packaging and higher recycled content: Consumer preference and regulation are pressuring downstream customers (consumer goods, food, pharma) to increase recycled content and reduce single-use plastics. Regulatory targets in multiple markets (EU, Japan, select US states) push packaging recyclability and recycled content ratios upward by 2025-2035. For a chemicals and materials supplier like Sumitomo Chemical, this creates demand growth for modified polyolefins, compatibilizers, barrier coatings compatible with recycled feedstocks, and specialty additives that enable recyclate quality. Typical commercial targets cited by customers range from 25% to >50% recycled content by 2030, varying by region and product category.

Demand for flexible work and strong ESG commitments from Gen Z: Younger cohorts entering the workforce (Gen Z, younger Millennials) prioritize flexible work arrangements, transparent ESG performance, and purpose-driven employers. Surveys across APAC and global markets report >60% of Gen Z consider corporate sustainability when choosing employers. This affects recruitment and retention in R&D, digital, and sustainability teams-functions critical to Sumitomo's innovation pipeline. Failure to offer hybrid work, clear sustainability roadmaps and measurable targets can increase turnover and raise hiring costs by an estimated 10-20% in competitive talent markets.

• HR metrics to monitor: voluntary turnover in R&D and sustainability roles, time-to-hire for digital talent, employee Net Promoter Score segmented by age cohort.
• Corporate actions: publish clear ESG KPIs (GHG, water, circularity), enable flexible/hybrid policies and career pathways tied to sustainability projects.

Diversity and inclusion expectations influencing talent strategies: Global and domestic stakeholders increasingly expect diverse leadership and inclusive workplaces. Empirical studies show companies with greater gender and ethnic diversity often report improved innovation metrics and higher employee engagement; boards and investors are increasingly demanding disclosure on D&I metrics. For Sumitomo Chemical, setting targets (e.g., % women in leadership, % non-Japanese in global leadership roles) and tracking metrics (hiring, promotion rates, pay equity ratios) will influence access to global talent pools and brand perception with multinational customers and ESG-focused investors.

Sumitomo Chemical Company, Limited (4005.T) - PESTLE Analysis: Technological

Demand for extreme ultraviolet (EUV) photoresists is escalating as semiconductor logic scaling targets 2-nanometer (2 nm) nodes and beyond. Industry roadmaps from major IDM and foundry players project 2 nm process development activity and pilot production between 2024-2028, driving high-purity specialty chemicals demand. EUV-specific resist volumes remain small in absolute terms but command high ASPs (average selling prices) and stringent quality specifications (LER/LWR control, line edge roughness ≤ single-digit nm). Estimated annual addressable market for EUV photoresists and associated ancillary chemistries is forecast to grow at a ~18-25% CAGR through 2028, from an estimated USD 0.8-1.2 billion base in 2023 to USD 2.0-3.0 billion by 2028.

Sumitomo Chemical's capabilities in photoresist polymers and synthesis position it to capture higher-margin EUV niches, requiring investments in ultra-high purity manufacturing, contamination control, and multi-site qualification cycles of 12-24 months per customer node.

Widespread adoption of AI-driven materials informatics and automated labs is shortening R&D cycles and increasing hit rates for functional materials. Organizations deploying machine learning, high-throughput experimentation, and digital twins report 30-50% reductions in discovery timelines and 2-4x improvements in candidate triage efficiency. For Sumitomo Chemical, integrating proprietary reaction databases, in-house combinatorial platforms, and collaborations with AI startups can yield:

• Faster optimization of polymer architectures for photoresists and separators (time-to-candidate cut from ~24 months to ~12 months).
• Predictive modeling for process scale-up reducing first-pass yield loss by an estimated 10-20%.
• Cost savings in raw material screening and formulation experiments-potential CAPEX/OPEX reductions of 5-15% over three years.

Advanced chemical recycling technologies and bio-based material roadmaps are strategic for regulatory compliance and feedstock resilience. Chemical recycling (pyrolysis, depolymerization, solvolysis) scale-up targets post-2025 are projected to process several hundred thousand tonnes/year in pilot clusters globally. Bio-based monomers and polymers (PLA, PHA, bio-PA, bio-PET precursors) are expected to penetrate packaging and specialty materials with price parity targets by 2027-2030 as scale and feedstock contracts improve.

Key considerations for Sumitomo Chemical include securing feedstock offtake, investing in pilot recycle/refinery plants (CAPEX: estimated JPY 5-30 billion per facility depending on capacity), and aligning product qualification cycles with major customers aiming for 30-50% recycled content targets by 2030.

Solid-state battery developments present opportunities for supplying ceramic fillers, sulfide/oxide precursor chemicals, polymer electrolytes and interface modifiers. Industry roadmaps forecast pilot automotive SSB cells by 2025-2027 and potential commercialization beyond 2028. Market estimates place the solid-state electrolyte materials segment to grow at 40-60% CAGR from a small base (USD hundreds of millions in 2023) to multi-billion by 2030. Sumitomo Chemical can leverage polymer electrolyte and ceramic coating expertise to develop:

• Polymer matrices with ionic conductivity >10^-4 S/cm at room temperature via tailored backbone chemistry.
• Coatings and binders that improve electrode-electrolyte interfacial stability and manufacturability.
• Supply chain partnerships for battery-grade precursors with target impurity levels <10 ppm for critical cations.

Battery separator technologies are evolving to improve thermal stability, mechanical strength and shutdown behavior for EV applications. The global separator market was approximately USD 9-11 billion in 2023, with high-performance PE/PP microporous membranes and ceramic-coated separators commanding premium pricing (10-30% above commodity grades). Advances include ceramic nanoparticle coatings, inorganic fillers, and multilayer coextruded films delivering:

• Improved thermal shrinkage resistance: target <5% at 150°C for safety margins.
• Higher puncture resistance: >300 N tensile/puncture thresholds for large-format cells.
• Enhanced electrolyte wettability and ionic conductivity through surface functionalization increasing effective ionic transport by 5-15%.

Strategic R&D and capital deployment metrics for Sumitomo Chemical:

Sumitomo Chemical Company, Limited (4005.T) - PESTLE Analysis: Legal

EU REACH 2.0 compliance costs and PFAS ban reformulations: Sumitomo Chemical faces increased regulatory compliance costs in the EU driven by REACH 2.0 revisions effective 2024-2027 and emerging PFAS restrictions. Estimated incremental annual compliance and reformulation expenditure for EU operations is ¥12-18 billion (¥12,000-18,000 million) over 2024-2028, covering registration dossier updates, additional testing, substitute development, and supply-chain auditing. PFAS-related product reformulations affect fluorochemical intermediates and specialty polymers representing approximately 8-12% of Group specialised chemical sales (¥45-68 billion of FY2024 revenue exposure). Expected product phase-out timelines range from 24 to 60 months per substance group; substitution R&D capex for affected product lines is projected at ¥4-7 billion per year for 2024-2026.

Intellectual property protection amid rising global patent activity: Global patent filings in agrochemicals, pharmaceuticals, and advanced materials have increased ~6-9% CAGR 2018-2023. Sumitomo Chemical's patent portfolio stood at ~6,200 active families in FY2024 with annual patent prosecution and litigation budgets of roughly ¥3.2 billion. Key legal risks include increased oppositions and IPR challenges in China, India and the US; average cost of defending a priority patent opposition internationally is ¥25-80 million, while a full-scale infringement litigation can exceed ¥200-700 million. Strategic IP metrics:

TCFD/TNFD disclosures and OECD Pillar Two tax compliance: Regulatory pressure and investor expectations push enhanced climate- and nature-related financial disclosures (TCFD, TNFD) and global tax rules (OECD Pillar Two, global minimum tax) compliance. Sumitomo Chemical reports Scope 1+2 emissions of ~4.1 million tCO2e (FY2024) and Scope 3 of ~9.6 million tCO2e. Incremental compliance costs for expanded TCFD/TNFD reporting, scenario analysis and assurance are estimated at ¥450-700 million annually. OECD Pillar Two: the Group-wide effective tax rate impact is modelled between +0.5-1.8 percentage points vs. pre-Pillar Two baseline, potentially increasing annual tax expense by ¥7-25 billion depending on jurisdictional blending and covered taxes. Implementation administrative costs are forecast at ¥200-500 million one-time plus ¥120-240 million annual tax compliance costs.

Labor law reforms imposing overtime caps and wage increases: Japanese and key overseas markets (ASEAN, EU, US) continue labor reforms tightening overtime and increasing minimum wages. In Japan, overtime caps (Work Style Reform) limit overtime to 45-60 hours/month with statutory penalties; Sumitomo Chemical's domestic payroll exposure for compliance (wage adjustments, hiring, automation) is estimated at ¥8-11 billion incremental annual labor cost. In ASEAN and China, minimum wage increases and social insurance contribution increases raise regional labor cost base by an estimated 3-7% annually (impacting manufacturing wage bill of ~¥62 billion across Asia). Operational impacts include:

• Increased direct labor costs: +¥10-15 billion annual (global)
• Shift to automation and process optimization: planned capex ¥15-25 billion over 2025-2027
• Work-hour compliance monitoring systems and payroll upgrades: ¥300-600 million one-time

Compliance-driven governance and disclosure burdens: Growing regulatory complexity increases governance overhead across legal, compliance, and sustainability functions. Sumitomo Chemical has expanded its compliance organization to ~420 full-time equivalent (FTE) compliance/legal staff worldwide (FY2024), up from ~310 in FY2021. Annual non-production compliance spend (legal, audits, training, third-party assurance) is approximately ¥6.8 billion, including:

Mitigation and operational responses include strengthened contract clauses, expanded compliance audits, accelerated green-chemistry substitution programs, increased IP enforcement budgets, centralized tax governance for Pillar Two, targeted automation investments to offset labor cost rises, and stepped-up external assurance for TCFD/TNFD reports. Projected near-term legal & compliance cash outflows (2025-2027) are ¥25-40 billion cumulatively, excluding potential fines or litigation settlements.

Sumitomo Chemical Company, Limited (4005.T) - PESTLE Analysis: Environmental

Sumitomo Chemical has set an emissions-reduction target of 30% by 2030 (versus the company's FY2019 baseline). The target applies to combined Scope 1 and Scope 2 emissions and is integrated with intermediate annual decline targets and internal carbon pricing mechanisms to steer capital allocation and product pricing. Internal carbon price guidance is currently set at ¥10,000-¥20,000 per tCO2e for project appraisal, escalating to ¥30,000+ per tCO2e for long-term investment decisions to reflect likely external policy tightening by 2030.

Key emissions metrics and targets:

Sumitomo Chemical reports a 95% domestic waste recycling rate for its Japanese operations and is advancing circular economy initiatives across product lines (agrochemicals, polymers, electronics materials). The company is targeting full-material recovery loops for specific polymer product families by 2035, with intermediate mechanical and chemical recycling capacity ramps.

• Current domestic recycling rate: 95% (operational waste, FY2023).
• Target: closed-loop recycling for ≥3 polymer product families by 2030.
• Investment envelope for circular projects: ¥25-40 billion (2024-2028 capital plan).

A biodiversity and Nature Positive agenda has been embedded in site and supply-chain planning. Sumitomo Chemical has completed biodiversity mapping for >120 manufacturing and research sites, covering approximately 22,000 hectares globally, and established restoration commitments for high-priority locations: mangrove reforestation (5,000 ha by 2030), native-plant corridor restoration (2,000 ha by 2030), and peatland protection partnerships.

Technological pilots: Sumitomo Chemical is advancing green hydrogen and waste-to-polyolefin demonstrations. A green hydrogen pilot (electrolyzer-based) at a chemical site is sized at 10 MW electrolyzer capacity with expected green H2 output ≈1,800-2,500 tH2/year (depending on capacity factor), targeting partial substitution of fossil hydrogen by 2027. The company is also scaling waste-to-polyolefin technologies via commercial demo lines aimed at converting mixed plastic waste to olefin feedstock at ~10 kt/year pilot throughput, with commercialization roadmaps toward 50-100 kt/year facilities in the early 2030s.

• Green hydrogen pilot: 10 MW electrolyzer; target online 2026-2027; expected CAPEX ~¥12-18 billion (site integration).
• Waste-to-polyolefin demo: 10 kt/year pilot throughput; target technology maturity by 2028; target commercial scale 50-100 kt/year by 2032.
• Public-private partnerships: co-funding discussions with government and utilities to access renewable electricity offtake agreements.

Transition to green feedstocks is positioned as a strategic priority across petrochemical and specialty-materials divisions. Targets include increasing bio-based or recycled feedstock share to 20% of total feedstock use by 2030 and to 40-50% by 2040 for selected product lines. The company is aligning product carbon footprint (PCF) accounting and supplier engagement to secure certified biofeedstock, PCR (post-consumer recycled) resins, and electrified process heat.

Decarbonization incentives combine internal pricing, CAPEX prioritization, product premiums and supplier engagement. Financial levers include a green project preference score (applied to R&D and CAPEX), low-interest internal financing for projects that meet ≥30% lifecycle GHG reduction, and voluntary product labeling to capture green premiums (expected price premium range 3-12% depending on market).