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The Facts Behind Tyre Price Increases 2011
5 July 2011
The Facts Behind Tyre Price Increases 2011
• The key reasoning behind tyre price increases is directly linked to the increasing costs of raw materials, specifically natural rubber and crude oil and worldwide tyre shortage
• Rubber prices have increased due to several factors, drought early in 2010 followed by heavy rains later which flooded plantations hampered tree-tapping across Asian plantations generating a shortage of natural rubber
• Natural rubber prices increased by 75% in 2010 and saw prices break through the US$3.5/kg level for the first time in 60 years. Natural rubber prices are forecasted to increase by a further 14% in the first quarter of 2011
• A worldwide increase in new car sales has increased demand by 8% from the global OE market and Manufacturers are contractually bound to supply OE as a priority
• The market has also experienced a worldwide increase in replacement tyre sales
•European tyre sales were up 10% overall in 2010 despite the UK market reporting a 2% decrease
• Other raw material price increases have effected current tyre prices, Crude oil prices rose to just over $90 a barrel by the end of 2010 and prices are forecasted to increase further in 2011
• Worldwide tyre stocks will be reduced by a further 12% in 2011 again affecting prices
•The worldwide shortage will cause restricted supply of tyres into the UK in 2011 and encourage tyre manufacturers to sell products to markets generating the highest profit return first