In the first shot of 2025, the tire giant will increase by up to 8%
The first shot of 2025 hit the target of tire people's eyebrows. Michelin (China) Investment Co., Ltd., the world's top tire company, issued a notice on price adjustment.
Michelin stated that due to the recent continued increase in the prices of major raw materials, the cost of tire production has increased accordingly. In order to continue to provide the market with high-quality, high-performance products, enhance consumers' travel experience, and at the same time ensure the company's own health, stability and continued operations, the company has decided to Starting from January 20, 2025, prices will be adjusted for products in the truck and bus business lines, light truck tires and off-highway transportation business lines in China and Mongolia, with a price adjustment range of 3%-8%.
Many tire companies increase prices in 2025
On December 6, 2024, Dunlop Tire Sales Co., Ltd. issued a notice on the price adjustment of Dunlop tires starting from January 2025. The notice showed that due to the increase in tire raw material prices, the cost of tire production has increased significantly. In order to continue to provide consumers and customers with the same To provide high-quality products, the company has decided to adjust the price of Dunlop passenger car tire products from January 1, 2025, with an overall adjustment range of 3%.
On December 2, 2024, Shanghai Shuyan Tire Sales Co., Ltd. issued a price adjustment notice stating that due to the downgrade of market consumption, in order to improve the service quality of physical dealers, the company decided to start from January 1, 2025, Shuyan nationwide distribution The dealer implements the new pricing system for its agent brands.
Sumitomo Rubber North America will increase prices in the United States and Canada starting January 1, 2025. The company has issued multiple price increase announcements in recent years.
Affected items include certain Falken passenger tires, as well as certain light truck and commercial truck items. Company officials said the increase was in response to rising operating costs. The company said: "Several factors drove the need for this price increase, including increased transportation and labor costs, raw materials, and other market factors. A Sumitomo official said that Falken's minimum advertised pricing plan on Falken products brought Higher profits.
Throughout 2024, rubber prices will run at a high level
The main closing price of rubber on December 31, 2024 is 17,820 yuan/ton. It is not difficult to see from the price list that throughout 2024, the price of rubber is generally relatively high. At the beginning of the year, the rubber price was 13,115 yuan/ton. In the second half of 2024, the rubber price All prices remain above 15,000 yuan/ton. This price is at a high level among prices over the years.
Not only that, as early as November 2024, Kraton Corporation, the world's leading supplier of specialty polymers, announced that it would monitor all of its styrene-butadiene rubber-butadiene-isoprene rubber (SIS) on January 1, 2025. , that is, the price of synthetic rubber, which is extremely important for tire manufacturing, increased by 2,391 yuan per ton ($330 per ton). Synthetic rubber prices are rising too!
Cabot Carbon Black announces price increase
Cabot Corporation, an American carbon black supplier, announced that it will increase its global sales price of specialty carbon black starting from December 1, 2024. The price increase is due to the impact of inflation on rising labor costs, equipment maintenance expenses and other manufacturing operations and supply chain related costs. The price increase varies depending on the carbon black variety and origin.
Tires are composed of natural rubber, synthetic rubber, carbon black, steel and various chemical raw materials. Among them, natural rubber accounts for 28% and synthetic rubber accounts for 26%. These two raw materials account for more than 50%. Therefore, the price increase of raw materials is also the first factor affecting the cost of tire manufacturing.
The all-steel tire market is collapsing. It’s either that it doesn’t want to rise or that it doesn’t dare to rise.
In 2024, the average operating rates of China's all-steel tire sample companies in the four quarters were 57%, 61%, 59% and 58% respectively. It can be seen that even with the support of the stocking conference, the operating rate of all-steel tires this year has still not reached a profitable level (it is generally believed that the operating rate must reach 70% to achieve profitability). Even in the last quarter, the operating rate of all-steel tires has dropped to the level of the first quarter.
Compared with 2023, the performance of all-steel tires in 2024 is unimaginably poor, with average year-on-year declines of 3%, 4%, and 2% in the second, third, and fourth quarters respectively. It is conceivable that without the support of exports and semi-steel tires, the tire factory business this year will almost end in losing money.
In mid-July 2024, the inventory days of large car tires reached the peak since December 2022, 47 days, which directly drove large car tire dealers crazy. "It will not be as bad as this year in 2022. Although it will not be very good after April 2023, it will recover in the third quarter, but in 2024 it will be higher month by month."
From January 15 to February 15, 2024, the inventory circulation days of large tires stayed at 45 days for almost a whole month.
After June 2024, the inventory circulation days of large tires will remain at 45 days for almost a whole month. Although the inventory circulation days of large tires have improved after August, this improvement is not determined by the market. Some tire dealers only restock but do not purchase goods, which is the real reason for the gradual decline in inventory.
The tire market is sluggish, so for domestic tire companies, it's not that they don't want to increase product prices, but they dare not.
Michelins, it has to be Michelin!
The current tire market is pursuing low-priced tire products, but in fact, foreign-invested high-priced tire products not only leave enough profit margins for foreign-funded enterprises, but are also a price reference for domestic enterprises. The presence of foreign tire companies in the all-steel tire market is a reference for higher prices, and Michelin is still Michelin! No matter what the market is like, for the healthy development of enterprises, they must pay more attention to their own profits rather than blindly benefiting consumers.
Next, it is not even ruled out that other tire companies will imitate Michelin's price increase and further increase the price of tire products to increase their own profits. As the industry benchmark, Michelin has taken action. How will other companies arrange their positions?
