Impact of Raw Material Prices on Tire Manufacturing Costs
The manufacturing cost of tires is significantly influenced by the prices of raw materials, with rubber being a primary example. Over the course of 2022, the cost of rubber, a crucial ingredient in tire production, experienced a noticeable upward direction. This trend persisted into early 2023, reaching its zenith in February. This surge in price extended to other vital materials, such as natural rubber and carbon black.
Rising Raw Material Costs and Domestic Tire Companies
Throughout the first quarter of 2023, raw material costs surged consecutively, exerting substantial pressure on domestic tire manufacturers. In response to the mounting expenses, these tire companies found themselves compelled to release frequent communiqués announcing price hikes. The escalating expenses of essential inputs like rubber and carbon black have prompted these manufacturing entities to take proactive measures to offset their production costs and maintain profitability.
The significant increase in prices of raw materials, particularly rubber, carbon black, and natural rubber, has posed significant challenges for domestic tire manufacturers. In order to manage the impact of rising costs and protect their profit margins, tire companies have been forced to execute strategic price modifications. This ongoing scenario highlights the complex interchange between the dynamics of the raw material market, manufacturing costs, and pricing determinations within the tire industry.
The overall price rebounded slightly in July, and the price of rubber fluctuated by nearly one-thousandth of the rise and fall. On the whole, the price of raw materials is still running at a low level. The drop in raw material prices is expected to restore the operating performance of tire companies, and the profit margins in the second half of 2023 may increase as well.
