Tire, O-ring, auto parts production rises in China

BEIJING (May 24, 2011)—Production of radial tires in China in the first three months of 2011 increased by 8.7 percent, O-ring output jumped 35 percent and automotive antivibration products manufacturing rose more than 45 percent, according to the China Rubber Industries Association.

Overall, tire exports increased slightly in the first quarter, rising to 40.9 percent of total tire production, the CRIA said. Total tire output rose by 5 percent, but this includes the impact of a 14- percent reduction in output of bias-ply tires.

The CRIA said profitability in China’s rubber industry continues to decline because of the increased prices of raw materials.

Source: http://www.rubbernews.com/subscriber/email.html?id=1306262597

Michelin Data shows Tyre Boom Slowing further

Michelin has updated its website with a regional breakdown of the growth in the global tyre industry. Most regions and markets are showing growth. However, as with March’s results, the overall picture is that the post-recession boom is coming to an end.
The site only gives percentage changes from a year ago, but the data shows growth in all markets and nearly all regions. Data is given for March, and for the year to date, which covers the first three months of 2011.
In the truck tyre markets, Europe’s growth in OE (Original Equipment segment) has further slowed to 54.3 percent, while growth for the year to date was 72.5 percent. For replacement tyres, 23.1 percent growth for the first four months of the year had slowed to 13.1 percent in April.
In North America, OE sales for the year so far were 65.7 percent, almost the same as April sales of 64.4 percent. Replacement sales were 21.8 percent for the year to date compared to 12.7 percent for the month of April. In Brazil, OE growth for the year was 23.2 percent, while April sales reached 25.3 percent. In replacement tyres however, April sales of 16 percent were lower than for the year to date at 22.1 percent.
At the time of writing, Michelin had not provided any data for truck tyres in Asia.
In the car tyre market, overall OE growth in Europe of 7.2 percent dived to minus 1 percent for April. While for replacement tyres, year to date growth of 10.9 percent sowed to 8.8 percent for the month.
In the Americas, North American OE sales were 10.2 percent for the year to date, but had eased to 6.8 percent for April while replacement tyres were 4.3 percent for the year and had significantly reduced to minus 2 percent in April. In Brazil, April OE sales were up 7.6 percent compared to 7.3 percent for the year to date. And in replacement tyres, year growth was 7.1 percent but jumped to 10.6 percent for April.
Michelin did not report any figures for Korea, Japan or south-east Asia but provided information about the Chinese car tyre market.
In China, OE sales for the year to date were 5.3 percent and had eased to just 1.3 percent for April. In replacement tyres, sales for the year were 23.2 percent and April sales were just slightly higher at 24.1 percent.
(European Rubber Journal, Reported from Paris, May 20, 2011)

Goodyear Tire & Rubber Makes a Move: Up 2.2%

One of today's stocks on the move is Goodyear Tire & Rubber (NYSE:GT), up2.2% to $17.22. The Dow Jones Industrial Average is now trading fractionally higher to 12,500 and the S&P is trading 0.5% higher to 1,335.

Goodyear Tire & Rubber share prices have moved between a 52-week high of $18.83 and a 52-week low of $9.10 and are now trading 89% above that low price at $17.22 per share. Over the last five market days, the 200-day moving average (MA) has gone up 0.76% while the 50-day MA has advanced 1.43%.

The Goodyear Tire & Rubber Company develops, manufactures, distributes, and sells tires for most applications. The Company also manufactures and markets several lines of rubber and rubber-related chemicals and provides automotive repair services. Goodyear also retreads truck, aircraft, and heavy equipment tires. The Company provides its products and services worldwide.

(Source: http://www.fnno.com/story/market-movers/331-goodyear-tire-rubber-makes-move-22-market-movers)

Sumitomo Rubber to build tire plant in Brazil - Nikkei

May 17 (Reuters) - Japanese tire maker Sumitomo Rubber Industries Ltd plans to spend 28 billion yen ($346.6 million) to build an automobile tire plant in Brazil, The Nikkei business daily said.

The company is considering building its first production unit in central and South America in the southern state of Parana, which borders the big tire market of Sao Paulo, the Nikkei said.

A local firm will be set up by July and construction work at the site is scheduled to begin next year, the newspaper said.

Production is expected to start in the autumn of 2013 and the company will gradually raise production at the plant to 15,000 tires a day in 2016, the business daily added.

Sumitomo currently sells tires exported from Japan in central and South America, the paper reported.

The plant will employ 1600 people, the Nikkei said.

New car sales in Brazil have risen 12 percent to 3.51 million units in 2010, making it the world's fourth-largest market, the business daily said.

Amid strong demand, Sumitomo Rubber's sales of replacement tires in central and South America zoomed 35 percent last year, the Nikkei added.  ($1 = 80.790 Japanese Yen) (Reporting by Mayuresh Tungare in Bangalore; Editing by Roshni Menon)

(Source: http://www.reuters.com/article/2011/05/16/sumitomorubber-idUSL4E7GG3F020110516)

Tyre prices inflate despite dip in rubber prices

HENNAI: Tyre prices continue to soar in India, despite the fact that the cost of rubber has dropped in the recent times. The phenomenon has hit the transport industry hard.

“The price of tyre was revised thrice in the last four months, even as rubber cost was scaling down in the market,” R Sugumar, president of Confederation of Surface Transport Tamil Nadu told Express.

Speaking on the sidelines of an agitation condemning the Centre’s failure to reduce toll fee for trucks on the National Highways here on Tuesday, he said, the raw material rate has hit a low in the country, after its export to Japan was stopped in the wake of tsunami. “But, the rate of a truck tyre which was Rs 16,000 during January has jumped to around Rs 20, 000 now, sending shock waves for the truckers,” he noted.

Pointing out that the price of Indian made tyre has not witnessed a downward trend since 2006, he said, a tyre was sold at just for Rs 8,000, five years back.

Charging that a high-level monitoring committee set up by the government to check tyre prices has failed to regulate the rates, he said that the anti-dumping duty has come in handy for the Indian tyre manufacturers to reduce local production. “At least 60 per cent of tyres sold in India are being imported from China at Rs 9, 000 and marketed with the ‘Made in India’ tag at a high price,” he said.

However, market sources attributed the price raise to inflation. Asked about the sudden drop in the prices of rubber, which should have reflected on the tyre rates in India, sources underlined that the Japan scenario was a temporary phenomenon and subsequently, the demand for rubber increased in China.

(Source: http://expressbuzz.com/finance/tyre-prices-inflate-despite-dip-in-rubber-prices/273370.html)

India: Tyre-maker Ceat to up prices by 3-5% from month-end

MUMBAI: Tyre-maker Ceat today said it has decided to hike its tyre prices by 3-5 per cent from this month-end to offset surging rubber prices for the second time this year.
"Raw materials prices have gone up to an all-time high, touching Rs 250 per kg of natural rubber. The current increase in rubber price is unbearable and we have decided to jack-up the selling price of all types of tyres," Ceat's Executive Director (Operation), Anarb Banarjee, told PTI here.
The price revision in the range of 3-5 per cent is inevitable and it would be made effective from the last week of this month across the country, he said.
Earlier, the company hiked tyre prices by 4-5 per cent in January this year.
Ceat Ltd is a part of RPG group and is the fourth largest tyre manufacturer in India.
High raw material costs had impacted the company's performance in FY 11.
The company reported an 83.71 per cent decline in its consolidated net profit for the year ended March 31, 2011, to Rs 26.46-crore as against a net profit of Rs 162.47-crore in the same period last fiscal.
On a stand-alone basis, the company suffered a loss of Rs 11.86-crore in the January-March quarter, as against a profit of Rs 15.33 crore in the year ago-period.
"Our profit declined due to increasing raw material prices," he said.

(Source: http://economictimes.indiatimes.com/news/news-by-industry/auto/tyres/tyre-maker-ceat-to-up-prices-by-3-5-from-month-end/articleshow/8169091.cms)

Good Year calls senior notes worth $350 mn for redemption

AKRON(Commodity Online) : The Goodyear Tire & Rubber Company has called $350 million of its outstanding 10.500% senior notes due 2016 for redemption on May 27, 2011. Goodyear intends to use net proceeds from its recent mandatory convertible preferred stock offering to fund the redemption.
The redemption will result in savings to annualized interest expense of approximately $40 million, of which about $23 million will be realized in 2011.
The redemption price is 110.500% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to May 27, 2011. The redemption is pursuant to provisions of the notes that allow the company, at its option, to redeem up to 35 percent of the original principal amount of the notes with proceeds from one or more equity offerings.
Goodyear is one of the world’s largest tyre companies. It employs approximately 72,000 people and manufactures its products in 55 facilities in 22 countries around the world.

(Source: http://www.commodityonline.com/commodity-stocks/Good-Year-calls-senior-notes-worth-$350-mn-for-redemption-2011-04-28-38542-3-1.html)

Tyre Stocks Rally Since Modi Deal, May Not Sustain In India

Shares of Indian tyre companies have gained by three to 13 per cent after German tyremaker Continental AG agreed to buy Modi Rubber’s unit last week.
Since the Continental-Modi Tyres deal last Monday (Apr 25) for an undisclosed amount, shares of Modi Rubber have rallied nearly 20 per cent. Other tyre stocks like MRF (up 12.1 per cent), Apollo Tyres (up 7.3 per cent), Balkrishna Industries (up 4.55 per cent), JK Tyre & Industries (up 3.1 per cent) and Ceat (up 3.3 per cent) have all gained since then.
However, market experts are not impressed. “Whenever some deal happens, shares of other companies in the same sector are also going up. This has been the trend in the market in the recent past,” said S P Tulsian, an independent investment advisor. “The upmove in tyre stocks post the Continental-Modi Tyres deal is irrational and not sustainable,” he added.
Last month, shares of paper companies rallied 13-20 per cent after US-based International Paper, the world’s biggest paper company, agreed to buy a majority stake in Andhra Pradesh (AP) Paper Mills for $423 million. Most paper companies have sustained those gains since, as International Paper had offered a 180 per cent premium to the promoters of AP Paper.
In the case of tyre companies, the outlook for the sector is not rosy. “There will be some pressure on margins of tyre companies in the next two-three quarters due to high natural rubber prices,” said Ashwin Patil, analyst at LKP Securities. “However, current rubber prices which are ruling at Rs 230-240 a kg are not sustainable and should come down to around Rs 180-200 a kg by that time.”
Prices of natural rubber, which comprise a little over 40 per cent of raw material cost in tyre manufacturing, have increased 16 per cent in this year so far. Over the next 12-15 months, rating agency Icra expects the profitability of tyre manufacturers to be affected by the expected supply gap for rubber, despite robust demand for tyres.
Domestic tyre manufactures are also facing the threat of increasing penetration of Chinese imports into the Indian truck and bus radial tyre segment.
(Business Standard, India, April 26, 2011)

Asia Rubber: Tyre grade slips on demand fears; China shy away

SINGAPORE, April 25 — Prices of tyre grade slipped today as rubber futures tumbled on fears about weakening demand from auto makers, while main consumer China turned to cheaper cargo kept in domestic warehouses, dealers said.

Indonesia’s SIR20 grade changed hands late last week at US$4.885 (RM14.655) a kg for June shipment, down from US$5.68 a kg offered last Monday. Malaysia’s SMR20 was traded slightly above $5 as sellers struggled to find consumers.

The physical market bore the brunt of selling on Tokyo and Shanghai rubber futures as sentiment turned bearish after a devastating earthquake hit auto production in Japan, and China tightened the economy.

Toyota Motor Co is set to lose its crown as the world’s largest automaker after Japan’s earthquake and nuclear disaster slashed local output by almost two-thirds in March.

“I think we are lucky if we can still sell rubber at US$5 a kg. We offered rubber at US$4.87 but nothing happened,” said a dealer in Indonesia’s main growing island of Sumatra.

“The market is moving so fast and prices can change from morning to afternoon. Prices in China are already quite low,” he added.

The most active contract on Tokyo Commodity Exchange, currently October 2011 hit in intraday low of ¥395.4 a kg, its weakest since late March — well below a lifetime high around ¥535 struck in February.

Thai’s RSS3 grade, often regarded as a benchmark physical price, has slipped more than 8 per cent since hitting a record at US$6.40 a kg in February to track declines in futures market, although erratic weather in producing countries helped cushion the fall.

There were no deals for RSS3 and another Thai grade, STR20, as Chinese buyers switched to rubber already stored in warehouses on worries that Beijing’s monetary tightening could slash demand.

China’s turbo-charged growth eased just a touch in the first quarter, while its inflation jumped to a 32-month high, putting pressure on the government to do more to rein in prices and keep the economy on an even keel.

Dealers said SIR20 fetched a discount of up to US$100 to the prices quoted by dealers in Southeast Asia, while Thai grades were around US$20 cheaper as overstocked Chinese importers cut prices to attract tyre makers.

Week ahead

Worries about demand were likely to persist in coming weeks, but China could be tempted to buy on dips if domestic inventories kept falling.

Rubber inventories in warehouses monitored by the Shanghai Futures Exchange fell 7.7 per cent to 14,717 tonnes last Friday.

“We will be very happy if we can sell rubber at US$5 today because the market has gone down so much. Rubber in China is cheap and there’s a big discount there,” said a dealer in Singapore. “Prices in China are below US$5 a kg.” — Reuters

(Source: http://www.themalaysianinsider.com/business/article/asia-rubber-tyre-grade-slips-on-demand-fears-china-shy-away/)

Japan Auto Output Slumps After Quake, Toyota To Lose Crown Toyota

Toyota Motor Co is set to lose its crown as the world's largest automaker after Japan's earthquake and nuclear disaster slashed local output by almost two-thirds in March.
Japan's auto sector has been hit hard by the disaster due to a shortage mostly of electronic and resin-based parts in the wake of the magnitude-9.0 earthquake and resulting tsunami, as well as damage to a major nuclear plant which disrupted power supplies.
Toyota said last week it could take until the end of the year before production fully recovered.
The world's largest automaker said domestic production fell 62.7 percent to 129,491 units in March, while Japan's No.2 Nissan Motor Co said its corresponding figure fell 52.4 percent to 47,590 units.
Honda Motor Co said domestic production shrank 62.9 percent to 34,754 vehicles.
Toyota is now almost certain to lose the top producer ranking it has held since 2008 to General Motors this year. Toyota sold 8.42 million vehicles last year, topping GM's 8.39 million.
Koji Endo, managing director of Advanced Research Japan in Tokyo, said Toyota was now on track to post sales of around 6.5 million units this year.
"Most likely GM will produce 8 million-plus and Volkswagon will produce around 7 million, so most likely Toyota will be third, GM will be first," Endo said.
Toyota, criticised by some analysts and investors for its aggressive expansion in the early 2000s, played down the prospect of losing its top ranking.
"When Toyota became No. 1 there were no champagne corks going off here," said Toyota spokesman Paul Nolasco. The March sales were the worst since records began in 1988, he added
Japanese automakers have not forecast what impact the production cuts will have on earnings, but analysts have been slashing their forecasts since the disaster.
"In overseas markets consumers have choices and (non-Japanese makers) probably will take some share, but I think it is an open question if those will be sustainable or temporary share changes -- my guess is that they will tend to be temporary," said Christopher Richter, an auto analyst at CLSA Asia-Pacific Markets in Tokyo.
"Probably the negative news is in the share prices and it is just a matter of time before some of this positive news starts to get imputed into share prices."
Shares in the major automakers were slightly weaker on Monday (Apr 25), with Toyota down 0.5 percent, Honda down 1.3 percent and Nissan 1.7 percent lower.
Tokyo's transport equipment sub-index has bounced about 14 percent from its post-quake low, but is still more than 6 percent below where it was before the disaster struck.
In contrast, South Korea's Hyundai Motors has surged 30 percent over the same period, hitting a record high last week on expectations it will benefit from the woes of its Japanese rivals.
"These are good times for South Korean carmakers. They will gain market share, raise utilization rates," said Park Jong-min, a fund manager at ING Investment Management in Seoul. "They will also reduce incentives, which will help cut costs."
The disaster has been a major setback for the world's third-largest economy, with exports falling faster than forecast in March and industrial output data due on Thursday (Apr 28) expected to show a record decline. Some economists expect industrial production to fall as much as a quarter, month-on-month, in March.
Uncertainty on the earnings outlook is likely to linger well into the financial year which started on April 1. Many companies are expected to refrain from giving 2012 earnings guidance during the current fourth quarter reporting season and those that do are expected to paint a bleak picture.
"One source of concern is that analysts have not cut their estimates for the current year by very much," said Koji Toda, chief fund manager at Resona Bank in Tokyo. "I think many are leaving their figures unchanged because they don't have enough information to decide how far to cut them."
For Toyota, 11 analysts who revised their forecasts after the earthquake forecast an average operating profit of 281.9 billion yen for the year to March 2012.
That is down 65 percent from the consensus of 804 billion yen from 21 analysts before the quake, according to Thomson Reuters I/B/E/S. Toyota announces its results on May 11, but it is not certain if it will provide its own forecast.
(Reuters, April 25, 2011)

Goodyear Tire & Rubber Stock Hits New 52-Week High (GT)

NEW YORK (TheStreet) -- Goodyear Tire & Rubber (NYSE:GT) hit a new 52-week high Wednesday as it is currently trading at $15.72, above its previous 52-week high of $15.71 with 1.3 million shares traded as of 10:12 a.m. ET. Average volume has been 6.9 million shares over the past 30 days.

Goodyear Tire & Rubber has a market cap of $3.7 billion and is part of the consumer goodssector and consumer non-durables industry. Shares are up 29.8% year to date as of the close of trading on Tuesday.

The Goodyear Tire & Rubber Company engages in the development, manufacture, distribution, and sale of tires, and related products and services to consumer and commercial customers worldwide.

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TheStreet Ratings rates Goodyear Tire & Rubber as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally poor debt management and poor profit margins. You can view the full Goodyear Tire & Rubber Ratings Report.

(Source: http://www.thestreet.com/story/11088704/1/goodyear-tire-rubber-stock-hits-new-52-week-high-gt.html)

Goodyear breaks ground on new global headquarters

AKRON (Commodity Online): With help from friends and supporters, The Goodyear Tire & Rubber Company officially broke ground on its new global headquarters complex here today.
Goodyear Chairman, CEO and President Richard J. Kramer, Ohio Gov. John Kasich, Akron Mayor Don Plusquellic, and Summit County Executive Russ Pry made brief remarks, then were joined by a number of federal, state and local officials – all who helped negotiate the deal – and together, shovels in hand, they helped start construction at the worksite.
“This was truly a remarkable team effort and a good example of the public and private sectors working together for the common good,” said Kramer. “Goodyear is proud to be a global company headquartered in Akron, Ohio. Both Goodyear and the city have changed and grown over the years, but our commitment to Akron remains constant. Goodyear will continue to be a vital part of this community’s future.”
The groundbreaking took place on a grassy lawn, site of the new facility, just south of the company’s Innovation Center.
The project is scheduled to be completed in early 2013. At that time, Goodyear will relocate about 2,000 associates into the building, which will serve as headquarters for the company’s global operations and North American tire business team. The new building will connect with Goodyear’s existing Innovation Center and serve as a central campus for the company in Akron. The Innovation Center is currently home to more than 800 associates.
As part of the agreement, Goodyear will lease the office space through 2038 and have potential options through 2093.
The project was announced several years ago, but was delayed by the credit crisis.
Goodyear is one of the world’s largest tire companies. It employs approximately 72,000 people and manufactures its products in 55 facilities in 22 countries around the world.

(Source: http://www.commodityonline.com/commodity-stocks/Goodyear-breaks-ground-on-new-global-headquarters-2011-04-19-38271-3-1.html)

Yokohama Rubber raising export tire prices

TOKYO (April 1, 2011) — Yokohama Rubber Co. Ltd. (YRC) is raising prices on all tires it exports from Japan by up to 15 percent, effective immediately, but Yokohama Tire Corp. (YTC), the firm’s U.S. subsidiary, is holding the line on additional increases for now in the U.S.

YRC cited continuing increases in raw materials costs for its decision.

Yokohama said it will endeavor to hold the increase to a maximum of 15 percent, but higher prices may be necessary for specific regions or products. The firm said further pricing actions may be necessary later, depending on how raw materials costs develop.

Fullerton, Calif.-based YTC said it will monitor the situation and continue to evaluate the market.

YTC already had scheduled a price increase for April 1, of an average of 8 percent in the U.S. on light and medium truck tires. YTC also raised consumer tire prices in North America on March 1 by up to 8 percent.

Yokohama Rubber cited the “skyrocketing” costs of raw materials, including natural rubber, and their elevated levels.

“Despite continuous efforts to boost productivity and efficiency to offset those costs, the company has reluctantly concluded that it has no choice but to increase the prices of its export tire products at this time,” YRC said.

(Source: http://www.tirebusiness.com/subscriber/headlines2.phtml?cat=1&headline=Yokohama+Rubber+raising+export+tire+prices&id=1301694609)

IRSG Predicts Decade Of Strong Tyre Demand

The secretary general of the influential International Rubber Study Group (IRSG) has predicted strong global demand for tyres through to the end of the decade. Speaking at the opening of Tyrexpo Asia 2011 in Singapore on 29 March 2011 Dr Stephen Evans said: “Our forecasts point to a sustained growth and strong demand for new vehicles and tyres through to the end of the decade. Much of the extra demand will originate from China and to a lesser extend India, but from an overall perspective the years through to 2020 will be a period of opportunity for tyre makers and the replacement and service sectors.”
Dr Evans pointed to strong growth in OE and replacement tyre sales as a result of increased vehicle production: OE passenger car tyre sales growing from 290 million units in 2010 to 400 million units by 2020. Replacement car tyre sales moving from 760 million units in 2010 to 1.2 billion units by 2020.
“We believe there are currently around one billion vehicles in use around the world and predict that figure will rise to as many as 1.45 billion towards the end of the decade. China alone is set to reach a target of an extra 200 million vehicles over the same time frame,” said Dr Evans.
With around 70 per cent of natural rubber and 50 per cent of synthetic rubber going into tyre production, global rubber consumption is set to follow increased tyre manufacturing activity accordingly.
2010 consumption of 10.7 million tonnes of natural rubber for all markets (tyre and non-tyre) is forecast to grow to 15.4 million tonnes by 2020. The comparable figures for all synthetic rubber markets are 13.6 million tonnes in 2010, rising to 18.5 million tonnes by 2020.
(Tyrepress.com, March 29, 2011)

Raw material costs force tire prices upward

High oil and gas prices have been in the news for months now.

The trickle down is affecting everything from the food you buy, to the planes you fly and the tires you ride on.

It's not just what is going into your vehicle that's more expensive, it's also what's going on it.

If you haven't bought tires in the past few years, your wallet or purse will not be spared.

"Last year, year 2010, we had price increases anywhere from 25 to 90 percent. This year, they've gone up 8 percent in the first two months, and they've already announced another 6-8 percent increase in April," said Jerome Feldman from Belle Tire.

"Over the past 12 months, I'd estimate it at about 30 percent," Delta Tire's Mike Crittenden said. "Recently on the 15th, there was a 9-10 percent increase on the Cooper-made product that we also sell. which also went up 4 percent in March."

Aside from the increase in petroleum products used to manufacture tires, steel prices have risen 50 percent since early December. From February last year to this year, rubber has doubled in price.

Customers like Todd VanHentenryck of Grand Blanc feel like they're getting nailed by the higher costs. "Two years ago, I bought tires for my Grand Prix. It cost #300. I got them priced today, and it's $508. So that's $200. I haven't had a raise in two years."

Some others are not that concerned with the increased pressure on pricing. "Not too much. I get the max out of my tires. I rotate them the way I'm supposed to. I take care of my car," said Dwight Bocksnick from Flint. "If I get 50-60,000 miles out of them, that's a lot of miles on a set of tires."

Another issue is there are fewer tires being manufactured to limit older tires sitting on store shelves.

"I've never seen in this last year, so hard to get tires. It's just crazy," Feldman said.

It's not just passenger car tires affected by the price spikes. Truck, agricultural, construction and other commercial tires haven't been spared, either. With increases of 8-15 percent already this year, more price hikes are on the way.

Getting the right set of tires at the right price can be a challenge.

The best person to ask is a tire expert.

Although price is certainly an important consideration, so is getting the right tire for the right vehicle.

"Manufacturers will make three different levels of the tire. Some people used to call it a, good, better, best," Crittenden said. "It's like a 40,000, 60,000, 80,000-mile rating on the tires. The 40,000, of course, are going to be cheaper. But your initial investment to step up to the 80,000 is usually not significant. Just $60 to $80, as an example, on a set of four tires."

So is the type of tire.

"A Mercedes Benz will take a different tire than a Chevy Cobalt. The Benz will take what is called a performance tire that has a higher speed rating, does better in higher cornering, braking. The Cobalt will just take a regular tire," Crittenden explained.

Mid-Michigan's four seasons demand a tire that can handle all types of weather.

One thing to look for is the tire siping in the tread area, Crittenden said. "Some tires, your starter, your 40,000-mile entry-level tire will only have one sipe in the tread block."

(Source: http://abclocal.go.com/wjrt/story?section=news/consumer&id=8040824)

Goodyear announces prices of new stock offering: $50 per share

CLEVELAND, Ohio -- Goodyear Tire and Rubber Co. on Thursday will offer investors $435 million in special shares, hoping to use the proceeds to pay off some high-interest debt.

The preferred shares will cost $50 each, more than three times higher than the company's $14.57 open on Tuesday. After three years, in April of 2014, the preferred shares will convert into as many as 3.4 shares of regular stock.

The new shares will pay $2.94 per year in dividends. Goodyear's existing stock hasn't paid dividends since 2003. In addition to paying dividends, the preferred shareholders will be ahead of regular shareholders for payouts of Goodyear fails and liquidates within the next three years.

Based on those numbers, if Goodyear's shares fall over the next three years, the value of preferred shareholder's stock will fall at about the same rate as regular shares. So the value in the preferred shares will come from the dividends and priority ranking in case of liquidation.

If Goodyear's shares rise considerably, the preferred shares will have less value than the regular shares. For example, if an investor were to pay $1,000 for 69 shares of Goodyear's regular stock today, those shares would be worth $2,070 if Goodyear's regular shares were to climb to $30 per share by 2014.

But $1,000 would only buy 20 shares of preferred stock. If Goodyear's regular shares hit $30 by 2014, those preferred shares would convert into 55 regular shares worth about $1,650. Even after the dividends, that's a smaller appreciation than the regular shares would have.

Holders of the preferred shares can convert that stock into regular Goodyear shares at any time before the mandatory 2014 conversion, getting 2.75 shares of regular stock for each preferred share.

Goodyear spokesman Keith Price said investors will have to look over the company's prospectus and decided what value they see in having priority rights and regular dividend payments.

Proceeds from the offering will go to pay off $350 million in Goodyear corporate bonds. Those bonds carry a 10.5 percent interest rate.

(Source: http://www.cleveland.com/business/index.ssf/2011/03/goodyear_announces_prices_of_n.html)

Bridgestone Restarts Production At Final Quake-Affected Plant

Bridgestone has partially re-started production at its tyre plant in Nasu, Japan. This is the last of Bridgestone's factories in Japan to re-start after its operations were affected by the 11 March earthquake and tsunami.
The factory output will be increased gradually based on electricity restrictions and other issues.
The plant makes passenger car tyres, motorcycle tyres and others.
(European Rubber Journal, March 28, 2011)

Goodyear to Increase Truck Tire Prices Up to 15 Percent

AKRON, OHIO - Goodyear Tire & Rubber Co. will raise prices on its commercial truck tires on April 1, 2011. The increases will apply to all the company's brands, plus its tread rubber.

The increases are as follows:

• up to 15% on truck tires;
• up to 7% on tread rubber.

A Goodyear spokesman cited rising raw material costs "and other factors" as the reason for the price hikes.

Continental Tire the Americas LLC will increase the price of its Continental, General and AmeriSteel brand truck tires by 10% effective April 1 for replacement sales channels in the U.S. only.

The reason for the price hike is the continued escalation of raw material and energy costs, the company says.

Goodyear is the latest tire manufacturer to announce higher prices in the United States this year. Here's a list of recent increases:

Commercial

• Continental Tire the Americas LLC will increase the price of its Continental, General and AmeriSteel brand truck tires by 10% effective April 1 for replacement sales channels in the U.S. only.
• Yokohama Tire Corp. will implement a price increase on all of its light and medium commercial truck tires in the United States effective April 1, 2011. Prices will be raised an average of 8%, with in-line adjustments.
• Double Coin and China Manufacturers Alliance LLC (CMA) hiked commercial tire prices an average of 13% on March 1. The price increases applied to the Double Coin radial truck and bus tires, all of its private brand radial truck and bus tires, and Double Coin radial off-the-road tires.
• Toyo increased prices on its commercial truck and OTR tires by an average of 8%, with in-line adjustments, on March 1.
• Michelin increased prices on its commercial products in the U.S. effective March 1. The company also raised prices an average of 12% on Michelin and BFGoodrich truck tires and Michelin Retread Technologies and Oliver retread products.
• (Michelin also is raising prices on its Michelin and BFGoodrich truck tires sold in Canada up to 7% on April 1.)
• Michelin and BFGoodrich passenger and light truck winter replacement tires sold in Canada.
• Hankook will increase prices on its medium truck tires by a weighted average of 9%. The increases will go into effect on tire shipments made on or after March 15, 2011.
• Titan Tire Corp. will raise prices on its farm and construction tires effective April 1, 2011. The increases, up to 8%, will apply to both Titan branded products and Goodyear branded tires manufactured by Titan. Certain tire prices "may rise in excess of 8% due to realignment and positioning of the product," said the company.
• Cooper Tire raised its commercial truck tire prices 12% across the board during the week of Feb. 6, 2010.
• The Bridgestone Off Road Tire, U.S. & Canada Commercial Tire Sales division increased prices on its mining, construction and industrial tires by 12%, "with some in-line adjustments" on March 1.
• The Bridgestone Agricultural Tire, U.S. & Canada Commercial Tire Sales division announced a 4% price increase effective April 1 on the following tires: Firestone agricultural, construction and forestry tires; Bridgestone garden tires; and Regency tires sold in the United States and Canadian replacement markets.
• Michelin increased prices on Michelin brand replacement agricultural tires sold in the U.S. and Canada on March 1. The hikes were up to 8%.
• The company already increased prices on its Michelin earthmover and industrial replacement tires sold in North America up to 7% on Feb. 1. It increased prices on Oliver and MegaMile retread rubber products sold in the U.S. up to 7% on Jan. 3.
• CGS Tyres Group (7.5% to 10% on farm and industrial tires), Titan Tire Corp. (up to 8% on farm and OTR tires), Yokohama Tire Corp. (up to 5% on bias and radial OTR tires) and Continental Tire the Americas LLC (up to 8% on truck tires) raised their commercial tire prices on Jan. 1.

(Source: http://www.businessfleet.com/News/Story/2011/03/Goodyear-Increases-Truck-Tire-Prices-Up-to-15-Percent.aspx)

Goodyear Hikes Tire Price

Goodyear Tire & Rubber Co. (GT - Analyst reports) announced it would raise prices of its commercial truck tires by 15% and the price of the tread rubber up to 7% from next month . The price increases were driven by rising raw material prices.
Rubber, both natural and synthetic, is mainly used to manufacture tires. This, in addition to carbon black, sulfur and other chemicals are used in tires.
Recently, natural rubber prices hit record high due to rising demand in Asia, especially China - the world's largest consumer of rubber. Moreover, there is a shortage in the supply of natural rubber due to heavy rains in major rubber producing countries, thereby pushing up the price.
Goodyear Tire, a Zacks # 3 Rank (Hold) shares, revealed a 32% drop in profits to $ 21 million, or 7 cents per share (excluding special items) in the fourth quarter of 2010 of $ 31 million or 14 cents per share in the same quarter of 2010. However, the company did well in comparison to the Zacks consensus estimate of a loss of 7 cents per share during the quarter.
The decrease in profit was due mainly to higher raw material costs, increasing the monetary effects of selling, administrative and general expenses and unfavorable translation. company's cost of sales increased 17% to $ 4,190,000,000, while selling, administrative and general expenses increased 12% to U.S. $ 715 million.
Sales during the quarter appreciated by 14% to 5.07 billion U.S. dollars, higher than the Zacks consensus estimate of $ 4,880,000,000. Was supported by a 4% increase in the volume of tires to 45 million units, which positively affected sales by $ 130 million.
In addition to the volume of unit sales were favorably affected by improved product mix / price leading tire revenue to increase by 12% during the quarter, excluding the effects of foreign currency translation.
Sales also benefited from an increase of $ 159 million in sales in other tire related businesses, sales of chemicals especially in third in North America. However, it was negatively affected by 111 million U.S. dollars due to unfavorable currency translation effects.
Goodyear's total segment income decreased $ 25 million to $ 224 million in the quarter. This was attributable to net $ 397 million of higher costs of raw materials ($ 430 million before the shares of raw materials cost reduction) and the negative impact of $ 17 million due to unfavorable foreign currency effects on translation which more than offset the benefit of $ 315 million due to improved price / product mix.

(Source: http://www.zacks.com/stock/news/49606/Goodyear+Hikes+Tire+Price)

Apollo Tyres shares get 'buy' rating FE BUREAU

As per media reports, tyremaker Michelin announced a 12% increase in truck tyre prices in Africa and India. Apollo Tyres is present in both these geographies. As per an article in Rubber World, Yokohama Tire raised truck tyre prices by 8%. We believe this sets the stage for price increases by other tyre manufacturers and bodes well for the fundamentals of the tyre industry.

Over the past two weeks, natural rubber prices in India have declined from R240/kg to R220/kg. Natural rubber costs are 30% of revenues for Apollo Tyres. We assume a natural rubber cost of R225/kg for Apollo Tyres over FY11. We have also analysed the potential for substitution of natural rubber usage in the glove industry and believe that higher rubber prices would lead to substitution of natural rubber by synthetic rubber in that industry.

We derive our price target from our sum-of-the-parts valuation. We value the company’s India business at 4.5x (times) the average of FY12-13e (September 2012e) EV/Ebitda (enterprise value/earnings before interest, taxes, depreciation and amortisation) and its international business at 5.5x. Apollo Tyres share is trading at 7.2x March 2012e PE (price-to-earnings).

We believe that price increases implemented by Michelin and Yokohama, as well as the marginal decline in natural rubber prices point to improving fundamentals for the tyre industry. As per Rubber World, natural rubber is 43% of the global rubber consumption and synthetic rubber is 57%. Tyre is 63% of the rubber consumption, while gloves contribute a majority of the remaining rubber consumption.

While tyre manufacturers are not able to flexibly shift between usage of natural vs synthetic rubber, glove manufacturers can shift the usage more flexibly. As per our conversation with Top Glove, natural rubber-based gloves (powder-free gloves) are 27% more expensive than synthetic rubber (nitrile)-based gloves; the same time last year, natural rubber-based gloves were 9% cheaper than synthetic rubber-based gloves.

Nitrile gloves are used in the USA and EU and contribute to 25% of global consumption of gloves. We believe the industry can shift marginally towards nitrile gloves as long as the pricing difference between nitrile and powder-free gloves lasts.

Substitution of natural rubber with synthetic rubber will likely improve the supply-demand dynamics of the natural rubber industry and help moderate natural rubber prices.

We believe the key risks are, a sustained industrial slowdown, continued increase in raw material prices, Further production interruptions, and any ruling against Apollo Tyres (and other tyre companies) by the Competition Tribunal in South Africa.

(Source: http://www.financialexpress.com/news/apollo-tyres-shares-get-buy-rating/765037/0)