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Inventory, supply, cost, multiple factors urge tire prices to continue to rise

Inventory, supply, cost, multiple factors urge Tire prices to continue to rise
According to foreign media statistics, as of the first quarter of 2022, the global tire price has increased by an average of 15% in the past two years (the price increase in some regions has far exceeded this figure), and the supply time has gradually increased since the second half of 2021. I thought that with the gradual improvement of port congestion in North America in the spring of 2022, tire prices could stabilize, but I did not expect that the Russian-Ukrainian conflict and the global epidemic have repeatedly raised the "inflection point" of tire prices. Even large tire dealers and retailers are more at a loss when faced with such a variable "upstream supply"...

Tire supply plummeting

Recently, overseas tire retailer RTL.lu revealed to the media that the tires currently circulating in the market are becoming less and less. "The epidemic and the conflict between Russia and Ukraine have increased the cost of tire manufacturing, and rising energy prices have pushed up supply chain prices. Now the price of tires is much higher than in 2020. One of the negative effects of higher prices is that the market fewer tires.”
Reduced tire supply is becoming one of the biggest headaches for the North American tire end market. As inflation intensifies and more consumers opt for replacement parts to update vehicle performance, tire purchases are increasing rapidly, but the mismatch with demand is Fewer and fewer overseas tire stocks. At present, the production capacity decline caused by the shutdown of many tire factories is exacerbating the low pressure on overseas retail inventories. Especially since the middle and late March of this year, domestic tire factories have suspended production and some tire companies have not resumed work as scheduled, so the delivery of export orders has been delayed; overseas, many overseas tire companies have stopped production in Russian factories, tire production capacity The decline is a foregone conclusion.
The delay in delivery and the sharp reduction in production capacity, and the pressure on overseas inventories continued to increase. Under the shortage of supply, the price of tires generally rose sharply. This is why many overseas tire companies said that although they are currently under high cost pressure, but with high demand, the tire business can continue to maintain high profits by increasing prices.

Tire prices are expected to continue to rise by 10%

Although tire prices have increased by an average of 15% in the past two years, if you look at different regions, you will find that the increase in overseas markets is far more than that. In the first quarter of this year, even some head tire companies had a single increase of 14%. In addition to being stimulated by increased demand, the skyrocketing cost is also one of the reasons.
Even when the price of natural rubber was well below the level of the same period, the rise in energy and other raw materials for tire manufacturing caused by the Russian-Ukrainian war caused the cost of tire manufacturing to rise again and again. Especially in Russia, which is an important supply and distribution center of synthetic rubber in the world, many uncertain factors brought about by the Russian-Ukrainian war have greatly affected the supply of synthetic rubber, which also greatly affected the price of synthetic rubber.
Since mid-March, the price of synthetic rubber has risen to varying degrees almost every other week. In the same way, the price of carbon black is also the same. Up to now, the supply price of carbon black in some parts of the country has risen by more than 20% to nearly 10,000 yuan per ton. At the same time, the price of industrial electricity has increased year-on-year since the beginning of this year. Adding all the influencing factors, the upward trend of tire prices has not been "shaken". Some tire manufacturers predict that before the fourth quarter of this year, tire prices are expected to continue to rise. 10%.

In the second half of the year, it may be difficult to buy tire

Although the current situation of "one-tire is difficult to buy" mostly occurs in overseas markets, with the increase in logistics supply in many places in China and the start of construction on some construction sites, the demand for cement and other building materials transportation has risen sharply, and the demand for tire repair and replacement will also follow. Increase. However, there are still many uncertainties in the current delivery of factory orders, and due to the pressure of stockpiling caused by the current high inventory of dealers, it is expected that as the market conditions gradually improve, there is a high probability that there will be a short period of low inventory in the domestic market.


Contact: Sophie Qiu

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