Why Tyre Prices Increased Sharply?
Why Tyre Prices Are Increasing?
Many factory reports of tyre price increases, along with the recent price increases in steel cords and carbon black, have eventually led to the question: Are tyre prices going to rise?
The price of raw materials determines the production cost, and the price of tyres is influenced by consumer supply and demand. We’d like to give the following analyses on the above question based on these points.
• Price of the raw material
COVID-19 had a significant impact on the global economy in 2020. The second wave of infection and the third epidemic cycle has hit several countries in the northern hemisphere. And in the face of adversity, we do hope for the best. With more information on the COVID-19 vaccine’s launch and use, major economic research organizations worldwide are optimistic about economic growth in 2021. The next year’s expectations for significant economies are solid, which has sparked interest in the potential bulk commodity market. The cost of natural gas, steel, crude oil, copper, and natural rubber has been steadily increasing, resulting in a significant increase in petrochemicals’ price. The decreased global competitiveness caused by the outbreak and the expectation of a potential economic recovery has influenced the prices of many commodities in the spot market, forcing the price of manufactured goods to rise.
• TBR — An Indicator
The TBR (Truck and Bus Radial) tyre is an economic barometer; demand is unlikely to increase or decrease in the current sluggish economic environment. Outside China, tyre factories have had a very low yield in the last six months, which has left a portion of demand unmet. The recurrent disease situation has given Chinese tyre manufacturers many orders that would have previously gone to international tyre manufacturers.
With enough production space, Chinese tyre factories can easily accept these orders without having to boost prices. Furthermore, the northern hemisphere’s winter and holiday seasons, as well as an absurdly high sea freight rate, have reduced overseas end-user demand, which does not allow tyre prices to increase. The factory’s production costs, on the other hand, are steadily rising.
Another question that might come to mind is whether tyre prices appear to be rising but are falling in trend. Not at all. In the year-long epidemic scenario, the global tyre inventory is insufficient, and neither the supply nor demand sides can make a direct and definitive forecast about the economy’s future. Regardless of whether costs rise or fall, tyre dealers are unable to stock up. That is why, despite several price increases by tyre manufacturers, end-user tyre prices have remained unchanged.
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