Goodyear Tire & Rubber and Cooper Tire & Rubber, the two largest U.S. tiremakers, will raise tire prices as much as 6.5% next month -- after already raising prices in June -- because of a worldwide shortage that has pushed up rubber costs, according to a report here by Bloomberg News.
And Bridgestone, the worlds biggest tire seller, is raising prices 6% in Europe, the second rise this year, thanks to the biggest shortage of raw material -- which also is used in gloves and condoms -- since 2007.
"Drought earlier this year and heavy rains later on hampered tree-tapping across Asian plantations," Pongsak Kerdvongbundit, managing director of Thailand-based Von Bundit, the largest natural-rubber producer and exporter, told Bloomberg. Thailand and Indonesia are the world's top rubber countries. "Global production will lag behind soaring demand for at least another two years."
While it may not seem like it in the U.S., economies are picking up steam elsewhere in the world and expected to push rubber consumption up 9.4% this year to 10.31 million tons, the fastest increase since 2004, the Singapore-based International Rubber Study Group told Bloomberg. Driving that in part will be an 8% rise in world auto sales this year and 7.2% next year, according to Ashvin Chotai, London-based managing director at Intelligence Automotive Asia.
Tiremakers are passing on the higher costs:
"We don't do a lot of raw-material hedging" said Keith Price, a spokesman for Akron, Ohio-based Goodyear. Raw-material costs are expected rise 30%-35% this quarter from a year ago and another 30% in the fourth quarter, the company said on a conference call July 29.
Current prices of $3,370 a ton for so-called Technically Specified Rubber used in tiremaking now are 53% more expensive than synthetic alternatives made from oil, data compiled by Bloomberg show. But it's impossible for tiremakers to substitute immediately synthetic for natural rubber, said Yuichiro Isayama of Goldman Sachs in Tokyo.
(usatoday.com)
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