ARE TYRE PRICES REALLY INCREASING?
China is one of the largest tyre producing country and generates huge funds from it, as it has a great demand worldwide and also, on the other hand, they have cheap labor which helps them cut the cost but now the raw material prices are increasing this will hit the tyre industry harshly in every possible angle. More than 50 Chinese factories have increased their prices within 5 months of the period giving the reason that raw material is costing a lot.
Tyre has been the most essential part of the vehicle since they have been invented. Tyres cannot be ignored when it comes to traveling of a human being or a good/product from one place to another. A tyre is made of natural rubber, synthetic rubber, fabric, wires with carbon black in it, and some other chemicals.
Rubber’s vital role:
As rubber plays most of the part in making a tyre and there is a shortage going on it. As the climate is changing globally and rubber trees might get affected by climate change and on the other hand we do not have any alternative for rubber.
Rubber is unique because it is tough and flexible. The global supply of rubber is around 20 million tons annually and Thailand is the largest producer of rubber. In the year 2020, the rubber demand was touching the sky and there was insufficient production of rubber which resulted in a peak in rubber prices as there was a shortage in the market 2-3 percent price was increased. Rubber price was 1.61 USD per kilogram in February 2020 and right now the price is 2.35 USD per kilogram it has a huge peak in it. Rubber is the most popular when it comes to raw materials.
Current scenario:
The Chinese tyre industry has been one of the top producers of tyres and now it’s been more than 3 times that prices of tyres are skyrocketing and not friendly on the consumer’s pocket at all. The consumer is suffering from all angles as the freight is also booming. There is also a 15 percent tariff in the US on tyres coming from China because of the border tensions. In between this electricity is also getting expensive day by day and the machinery works on that so this affects the production costs for the factories in China. Not only rubber is getting expensive Birla also confirmed that there will be an increase of 9 percent increase in the sale of Black Carbon after the 19th Aprils order. If the prices increase like this the survival of the tyre industry is going to be very difficult in upcoming years. Big factories can take the hit but the survival of the small factory will be nearly impossible if this continues like this. All the raw materials are important in the making of a tyre and a single one of them cannot be ignored as it is a matter of safety and lives could be at risk. Still, the Chinese tyres have a huge demand around the globe the tyres will be costly but the quality would never be compromised.