OPINIONS ON TYRE PRICE GROWTH

Recently the news for increased tire price blasts everywhere and bring a strong impact to the whole tyre manufacturing industry. Most people believe the roaring raw material price leads to this adjustment which in fact results from several factors. Here we would like to share some opinions on this issue.

First, various reasons caused tire price growth.

To begin with, the natural rubber price which fluctuated in 2016 makes new record recently by growing 50% from 10000RMB early 2016 to 15000RMB at the end. Besides, price for other raw materials like steel cord, carbon black, chemical powders etc. goes up to some extent, thus causing increase in tire manufacturing cost. Meanwhile, the new policy on transportation sets a limit of the truck dimensions and loading capacity, which to some extent increases the logistic cost. What’s more, since the beginning of 2016, the authority has adjusted the fuel price more often, which made the transportation cost more. Also the increasing trade and technical barriers from the international market, especially the changing of GCC certificate rules brought up tire certification. Therefore, tire companies are more discreet to certify product series and models.

Second, domestic tire price increase is predicted to be higher than that of the international market.

Seen from the current regions where has a rising tire price, it is predicted that the domestic market will have a bigger increase than that of the international market. The fluctuating of US dollar leads to the currency devaluation of many regions and countries which further brought up the importing price of the product.

Thirdly, the price adjust can be an opportunity for the industry reshuffle Industry Information

The increasing price of raw material is the basic reason of the increasing product cost. The tire companies should turn to improve the technology and manufacturing procedures to control the production cost appropriately. But when the price of raw material encounters a big rise, the above actions can’t offset the gap, then they are forced to mark up the product price. In order to keep their profit, the tire companies have to pass the cost pressure to the downstream suppliers.

However, there’re also some companies doing the opposite. Selling the product in a low price in order to keep a smooth cash flow regardless of the cost, which may cause a vicious circle in the market. When the cash flow cannot sustain the daily running of the company, it will lead to reorganization or bankrupt, which will affect the down-stream suppliers. A strong supplier can bring long term profit to the company, other-wise they are hurting each other. This is the reason of the opportunity for the industry reshuffle.

Here WANDA BOTO TYRE will continue to devote to produce high quality tyres for the global customers on the basis of a competitive price and the best sale-service. We always insist on that the quality which we pursue is the most important to a manufacturing enterprise.