Plummeting shipping rates mean prices of non-European imported tyres could drop. The Covid-19 pandemic led to unprecedented increases in shipping costs. Inevitably this has led to record profits at most of the major shipping firms, but now there are signs that the party is over. And if shipping costs have fallen, tyre imports into Europe are both more attractive and more competitive.
The Chinese tyre industry is not optimistic about the future following the first half of 2022, which itself was something of a continuation of the problematic situation experienced in the country in 2021. In short, the overall Chinese tyre industry has experienced severe decline in profits. Shen Jinrong, chairman of ZC Rubber, China’s largest domestic tyre manufacturer and number nine in the world, made the comments during a recent speech at the China Rubber Conference 2022.
During June Vaculug invited partners, suppliers and media to a high-profile event in Oxford based at the former prison (now Malmaison hotel) and including an exclusive dinner within one of the Oxford University colleges. The overall message is clear, the company is not only reaching out in the increasingly post-Covid environment – its growing team of experienced key industry personnel is positioning itself to capitalise on the company’s status as one Europe’s largest independent tyre retreaders.
Klarius reports that it has been using its “extensive UK stock of exhaust systems, components and accessories to limit price rises to the aftermarket” up till now. However, the continuing rises in global energy costs are now being compounded by direct sanctions on trade with Russia, which is also pushing up raw materials costs for manufacturing industry.
Announcing its financial results for the first quarter of 2022, tyre maker and automotive technology firm Continental states that it “performed well” during the period despite “an increasingly turbulent market environment.” It describes its Q1 2022 tyre business as “strong.”
Nexen Tire Europe is raising the prices of “all of the company’s brands in the replacement market”. The price increase is due to “the Ukraine-Russia conflict” and specifically “raw material prices such as carbon black, oil costs and freight and logistics costs”, which have all risen sharply, according to a Nexen statement issued today (13 April 2022).
JK Tyre CFO Sanjeev Aggarwal is making margin improvement in the face of inflationary pressures a top priority, according to a recent interview with India’s Economic Times newspaper. And therefore the company will pass on raw material price increases to its customers.
Falken Tire Europe GmbH has now announced in a letter to its business partners that it is implementing new price lists effective 1 January 2022 for both the Falken brand and for Sumitomo tyres. The price increases are considerable and extend well into the double-digit range. At the same time, the manufacturer is revising down certain price adjustments announced in September for the new year. However, both sets of price increases are limited to the German-speaking markets with Falken/Sumitomo Rubber representatives confirming to Tyres & Accessories that the price increases do not apply in the UK.
At the start of 2021 we published a headline suggesting that “shipping costs [were] temporary” and “price increases less so”. While that article was based on the latest third-party data as well as the expert opinion of a leading wholesaler, it now looks like shipping cost woes are set to continue well into 2022 and that – while they have softened recently – raw material costs will remain headwinds during the next year or so as well.
Year-on-year comparisons of financial performance tell us arguably more about global events than an individual company’s economic trajectory at the moment. Thus, it came as no surprise a few months back when Michelin reported much healthier first-half results compared with pandemic-riddled 2020. Similarly, eyebrows aren’t raised now when the company notes the impact of rising materials, shipping and energy costs as well as a shortage of semiconductors and labour shortages upon its performance in Q3 2021.
As if the Covid-related troubles combined with complex shipping challenges and rising raw material costs weren’t enough, Chinese government policy is now adding to the pressure on tyre manufacturers making tyres for export from the People’s Republic. Specifically, the Chinese central government environmental policy has led to power rationing across the country since mid-September, which has had a marked impact on manufacturing business including the tyre industry. Indeed, more than 20 tyre manufacturers have experienced power-rationing-related temporary shutdowns and/or have implemented price increases because of these product headwinds. And these are having a marked impact on tyre production.
Trelleborg Group brand Mitas has announced price increases for its motorcycle, scooter, go kart, trailer and aircraft tyres, as well as for its complete range of tubes and mousses. This increase, the second for 2021, takes effect from 1 October 2021 and is being implemented due to “significantly higher prices of raw materials and logistic services across the industry.”
Chemical and material manufacturer DuPont Mobility & Materials, which supplies tyremakers around the world, has announced sweeping prices increases globally. The price increases take effect from 1 October 2021 “or as soon as contracts allow”.
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China Rubber Conference 2022
Chris Anthony; Tyre Industry Publications Ltd
Klarius
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