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GLOBAL RUBBER PRICES
destroying jobs, companies and industries all over Europe.
“I don’t think we will notice big differences on what we’re seeing today, the price differential is becoming lower and lower between the new tyre and retreads because of dumping. “Not only are the retreaders fighting with Far East low prices and its over production and offers in Europe, but major manufacturers of new tyres are facing this problem too.
“So, prices may increase a little, for everybody, but the biggest influence remains dumping and the lack of tax for Far Eastern imports.”
There appears to be a mix of hope for a price differential and a sense of déjà vu amongst
user.
“The level of increase on prices of our raw materials is too big and too fast in my opinion, we are going from a period where the prices were probably too low to a period were the prices are too high. In my opinion it will be ver y difficult for the retreaders to pass these increases to the end user. Although for the information that I have, the prices of Chinese new tyres are also increasing. We will need to wait and see if there will be, in the medium term, some advantages for the retreading industr y or if the advantage will still be for the Chinese tyres.
Asked if he thought that this will assist retreaders compete
differential between new premium tyres and retreads of those tyres to the advantage of the retreader. This is only really an option where the retreader is producing a quality product and operating as part of the whole life cost of the new tyre, or where they sell the premium retread on a premium casing, as
Chinese government clamps down on sub-standard production, then that will clearly have an impact upon the demand for rubber and may depress rubber prices, or provide some respite on process and supply in the short term. For the Europeans, the ITC judgement refusing to impose
Plants like this from Hankook and Apollo may be a bigger threat to European retreading than price increase and Chinese tyres according to some commentators
duties on Chinese tyres imported into the USA offers a slight relief, as the spectre of the dumping of the excess volume from the US market in Europe has receded.
There is a certain irony in the idea that the European Union will not impose trade tariffs on cheap Chinese tyres because it claims it cannot legally do so. Yet, in the same breath, EU representatives are talking to the UK about trade barriers on goods traded between the UK and Europe (and vice versa).
retreaders, which reflects the response that we originally saw: A combination of hope and reality. Of course, this does not just impact upon retreaders. So, stepping up the ladder we spoke to Tiago Coutinho at EIB, who, as a rubber compounder, offered his slant on things, seeing the impact both as an importer of rubber and a producer of compounds and tread materials. “As everyone else we (EIB) will need to increase prices and nobody likes that. If all the producers of materials for the retreading industry increase at the same time at more or less the same percentage, the question will always be the capacity of the retreaders to pass these increases on to the end
against low price imports from the Far East? Coutinho responded. “If the increases that the Far East new tyre producers are announcing go through, maybe there is a possibility of helping, but on the other end if the embargo in the USA goes through there will be a huge quantity of tyres that will have to be sold here in Europe, despite the price. So, for the time being is difficult to say.” (The US embargo has not happened, so there is some relief in Europe for that small mercy).
The reality is probably going to be down to approach and attitude. In the price increase period, there may be a small opportunity to use the increased
impact of the recent round of retread up discussing Chinese tyres. Largely
If China keeps producing and subsidising exports, then the prices of retreading materials may be irrelevant in the long term.
an option, into that premium market. Where the retreader focusses on the cheap Chinese tyres as a direct competitor then that differential may not be the issue. It may not even exist. In this market price at the point of sale is all that matters and the real danger here is that, as others have said, by competing through using low quality materials and by cutting corners, retreaders may not only damage their own business, but the reputation and the business of others.
Much of the coming dynamics in the market will depend upon how the Chinese respond. If the Chinese government changes tack on export subsidies. If the
Footnote: We set out to discuss the
and tyre price increases, and ended
because the two are intrinsically linked. Also, as we write this article, the USA has launched missile strikes on Syria and oil prices have started to rise in response to concerns over the stability of the region and the increased risk of conflict. If this is sustained, rubber prices will be the least of the industry’s concerns.
This chart shows that rubber prices have been higher in 2011 and 2012 but Jan 2017 shows a sharp increase that could suggest that rubber prices are going to be heading higher.
18 Retreading Business