For tire businessmen, price is definitely the most concerned and hottest topic.
On August 27, 2024, an investor asked Linglong Tire whether Linglong Tire products have increased in price recently?
The company replied that, dear investors, the company continues to adjust its sales structure and increase the delivery of large-size products, and prices in some markets have increased. The tire business believes that now, the price of rubber has soared to 20,000 yuan/ton, and the price of tires has once again been pushed to the forefront.
01 Rubber price soars to 20,000 yuan/ton
On August 28, 2024, the main price of rubber exceeded 16,000 yuan, and the price per ton was 16,755 yuan, and the main price of rubber continued to rise. Today, the main opening price of rubber is still 16,500 yuan, and it is likely to rise above 17,000 yuan/ton in the afternoon. In early August this year, the rubber price remained at 14,000 yuan per ton. In just one month, the rubber price rose by more than 2,500 yuan per ton, an increase of nearly 20%.
Tires are made of natural rubber, synthetic rubber, carbon black, steel and a variety of chemical raw materials. Natural rubber accounts for 28% and synthetic rubber accounts for 26%, and these two raw materials account for more than 50%. Therefore, the increase in rubber prices is also the first factor affecting tire manufacturing costs.
02 Next, the rubber price will go like this...
Rubber prices directly affect tire prices, and the possibility of rubber prices continuing to rise cannot be ruled out.
According to reports, in the first seven months of 2024, Thailand exported a total of 580,000 tons of natural rubber to China, a year-on-year decrease of 2%. Among them, standard rubber exports to China totaled 468,000 tons, a year-on-year increase of 25%; smoked sheet rubber exports to China totaled 16,000 tons, a year-on-year decrease of 64%; latex exports to China totaled 95,000 tons, a year-on-year decrease of 45%.
From January to July, Thailand exported a total of 683,000 tons of mixed rubber, a year-on-year decrease of 40%; mixed rubber exports to China totaled 663,000 tons, a year-on-year decrease of 42%. Overall, Thailand exported a total of 2.354 million tons of natural rubber and mixed rubber in the first seven months, a year-on-year decrease of 12%; and a total of 1.243 million tons were exported to China, a year-on-year decrease of 28%. This will also further affect the price of rubber.
03 Production costs rise further
In addition to the surge in the price of the main rubber, other costs of tire companies are also increasing. A series of costs of tire companies such as employee wages, warehousing and logistics remain high.
A tire company production staff said that due to the increase in production costs, the average tire production cost will increase by about 1 yuan per kilogram. Take the 12R22.5 tire as an example. An ordinary tire weighs about 55 kilograms, so the raw material cost of a 12R22.5 tire has increased by 55 yuan.
The higher the weight of the tire, the higher the increase in raw material costs. The manufacturing cost of an all-steel tire has increased by about 10% on average. However, since the price increase last year, many companies have been making concessions. The price increase is only to stimulate consumption, and the tire price has not really increased. Even the price increase notice issued by the tire companies that really increased the price is mostly 3%-5%, and the increase cannot meet the cost of rising costs. What's more, most tire companies have not increased at all, and the profits of tire companies cannot be guaranteed.
04 Raw materials soaring, international market in short supply
Data released by the General Administration of Customs show that China's rubber tire exports in the first seven months of 2024 reached 5.34 million tons, a year-on-year increase of 4.9%; the export value was 94.1 billion yuan, a year-on-year increase of 5.5%. Among them, the export volume of new pneumatic rubber tires reached 5.15 million tons, a year-on-year increase of 4.6%; the export value was 90.6 billion yuan, a year-on-year increase of 5.5%. Calculated by the number of tires, the export volume reached 391.5 million, a year-on-year increase of 9.9%. From January to July, the export volume of automobile tires was 4.57 million tons, a year-on-year increase of 4.9%; the export value was 78.1 billion yuan, a year-on-year increase of 6.7%.
In addition to the soaring prices of raw materials in the market, the demand for tire products in the international market has also given Chinese tire companies the confidence to raise prices.
05 Tire market undercurrents
Rubber prices have further increased, and the tire market has also become undercurrents. If you ask me if any tire companies have issued price increase notices now? Then I will tell you that several tire companies did issue price increase notices in August, but the overall performance was insufficient. However, the more it is at this time, the more likely the undercurrents under the calm sea surface will form a life-and-death vortex.
The market price has not increased much now, but the continuous rise in rubber prices has brought considerable pressure on the operation of tire companies. The subsequent rise in raw material prices has become a strong support for the price increase of tires.
06 Buy early = save money
Every dealer must ensure a reasonable inventory. A dealer in Beijing said: I have warehouses in Beijing, Tangshan, Tianjin and many other places, and 100-200 million RMB are stored here every year. My inventory may maintain three months of sales. A reasonable inventory can help us increase tire sales. Inventory is inevitable, so reasonable purchase and shipment is a must for a qualified dealer.
Reposted from (Tire Business)
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