STARCO responds to rising material costs with price increase
After a period of relatively stable and low raw material prices, the wheel and tyre industry is now experiencing extensive increases in the cost of both rubber and steel. All major tyre manufacturers have already announced price increases, and although STARCO states it has fought hard to mitigate these increases, it now finds itself in a position where it must pass some of this additional cost on to its customers. This price increase will affect all STARCO market segments.
“We see expected yet intense increases of the raw material prices. We are ready to ‘eat’ our part whilst we unfortunately see the necessity to pass a part of the increase on to our customers,” states Thomas Ballegaard, chief commercial officer at STARCO.
Steel prices increased significantly throughout 2016, and this trend is continuing this year. Natural and synthetic rubber prices have followed suit – STARCO reports that prices have risen by up to 75 per cent in the last three months.
“When raw materials were reducing and at their low point, our price levels to our customers reflected this, however now it’s unfortunately the other way around,” Ballegaard adds. “In general, our customers know it’s a cycle and understand its impact on our product offering to them, even though announcing lower prices to customers is much more fun.”