Four major tire manufacturers have announced they will be increasing their prices over the next month or so, as the price of natural rubber is forecast to increase globally.
Goodyear Tire and Rubber Company was the first major manufacturer to announce that they will be increasing their wholesale tire prices.
They will increase prices by eight percent on all tire lines. Increases in rubber prices were cited as the driving factor in the price increase. Company officials were unavailable for comment at this time.
Cooper Tire followed Goodyear’s announcement by saying that they, too, will be increasing their wholesale tire prices to dealers effective February 1, or soon after.
A Cooper spokesperson said the company hasn’t settled on how much they will be increasing their prices, but will be doing a market assessment prior to making that decision. The company further stated that light truck and passenger car tire prices will be affected. Traction News attempted to contact Cooper officials to see exactly which product lines will be affected and if the company had made a decision on how much their prices will be affected, but has received no reply as yet.
The Carlstar Group has also announced they will be raising their wholesale prices on their specialty tire products from March 1. The brands affected are Carlisle Marastar, Marathon, and Ultra CRT brands. These brands will see increases of between eight and 12 percent.
Carlstar’s ITP Tires brand will see an increase of between five and eight percent across the entire brand. That price hike will become effective February 6. ITP markets a line of high performance tires for side-by-side vehicles, ATVs and UTVs. Carlstar told Traction News that market volatility may cause more price increases later this year.
And the latest company to announce an increase is Nexen Tire America, which is planning to increase prices by an average of five percent effective March 1.
Traction News has contacted all major tire manufacturers to ask about their pricing plans for 2017. We’ll let you know when we hear back.
So, why are tires getting more expensive?
The Association of Natural Rubber Producing Countries (ANRPC) recently announced that the price of natural rubber will continue to increase in 2017. Several reasons for this price increase were cited, including shortages of natural rubber due to weather problems, an increase in the price of synthetic rubber and increased demand.
Global weather patterns have been changing, including recent floods in Thailand,
and this has seriously hampered the growth cycle of rubber trees in traditional growing areas.
The International Monetary Fund has also recently announced that they expect the global economy to grow by approximately 3.6 percent this coming year. This growth will mean that shortages caused by decreased production will be even more severe.
Finally, synthetic rubber prices have also been on the rise. OPEC recently announced it will be cutting production by more than a million barrels a day. This means feedstock for synthetic production will be more expensive to obtain and, therefore, many users of synthetic rubber will see natural rubber as a more viable alternative, driving demand even higher.
The ANRPC was quoted as saying in a recent report “based on the emerging global economic scenario anticipated by the IMF, global supply of NR (natural rubber) will be short of demand by 350,000 (metric) tons during 2017. According to a preliminary assessment made by the Rubber Authority of Thailand, the flood is likely to shave out at least 360,000 tons from Thailand’s output of NR expected in 2017. The country will be able to produce only 4.38 million tons in 2017 as against 4.74 million tons originally expected.”