Tyre Factories Losing Money Due to High Raw Material Prices
Raw material overall in the world is getting expensive day by day and survival in the market is also getting difficult for the manufacturers. Prices are unstable from the starting of 2021 and it is not only affecting the consumer it is also affecting the manufacturer as their sales are dropping because of the increasing price. As most of the raw material is exported from different countries and freights are also high, which also affects the overall cost of the raw material.
As 2020 was the year of the pandemic and sales went down for all the manufacturers they are trying to cover their losses but on the other hand, raw material prices have started to increase. Tire manufacturers claim that a combination of factors other than OEM price increase has affected the sales of the tires. As results, the tire makers have stopped giving discounts to their customers. Also, the delivery time has gone up because of the import and export restrictions which have created supply constraints and lifted the prices. Tire marketers claim that it is not possible to take the entire brunt of the raw material price increase which will require a 7% to 10% increase, which is unviable in the marketplace.
Hike in the Prices of Raw Material:
The raw material prices have increased up to 20%-25% claimed by the tire manufacturers. The demand for rubber has been increased as it is a core raw material for most of the products. The main reason for the rubber shortage is the producers are not able to plant new rubber trees.
While on the other hand Birla Carbon first increased its prices in April by about 9% was increased and now in May, it has again increased its price to 97 euros per metric tonne for all the products manufactured for Europe, Middle East, and African countries. The price will be implemented on the shipments going after 1st June 2021.
If the prices increase in this manner the overall prices of the tires will again shoot up or the factories are going to bear the cost to maintain their customers.