The Price of Rubber Has Plummeted | Is the Price of Tires Going Down?

According to the latest futures information, on May 14, 2021, the main rubber futures contract on the Shanghai Futures Exchange fell 7.03% to 13,035 yuan per ton. On the 20th, rubber was down more than 7%.

May 13, (rubber) RU main closed at 13,715 yuan/mt, down 575 yuan. Blended rubber was quoted at 12,300 yuan per ton, down 325 yuan.

On May 13, the main closing price of (natural rubber) NR was 11025 (-500) yuan per ton, down 500 yuan. The Thai standard rubber in Qingdao Free Trade Zone was $1705/ton, down $40. Malaysian standard rubber was $1665/mt, down $45. Indonesia standard rubber $1665/ton, down $10.

Professionals believe that the sharp fall in rubber prices is closely related to the weakening of terminal demand. Relevant data show that as of May 6, the start rate of domestic all-steel tires was 51.93% (down 21.03% year-on-year), and the start rate of domestic semi-steel tires was 55.30% (down 15.59% year-on-year).

The domestic tire factory start rate is slightly down, tire factory and terminal dealer inventory rose, reflecting the weak state of demand. Coupled with the arrival of the rubber cutting season, the supply situation has turned robust, and the price of rubber is likely to continue to fall.

1. Will the price of tires continue to rise?

Based on the past situation, at the end of April, early May of every year, the increase of the tire price should be stopped. Next should be a big explosion of promotional information, but this year is different. Until now, tires do not seem to have the trend of price reductions, perhaps the price of tires in waiting for the stimulation of rubber prices.

There are still several tire companies that announced price increases in May: On May 11, 2021, Magis Tire announced a 2% price increase for TBR light truck products.

Since May 1, the maintenance market of Guizhou tires, supporting plant solid tires OB-501 series uniformly increased by 5%.

Since May 1, the price of some products of Ningxia Shenzhou Tire will be increased, the rate of increase and price will be subject to the announced price.

The price increase of overseas tires has been extended to June, and Goodyear will increase the price of passenger car tires on June 1. Bridgestone Americas will increase the price of OTR and agricultural tires in the United States and Canada by 8% from June 1.

2. When will the price of tires fall?

With the stimulus of falling natural rubber prices, I believe that soon tire factories will react, especially the China tire factory that buys spots.

In fact, at the end of April, many tire dealers have already started to reduce promotion prices. In addition to the price reduction, there is a buy 10 get 1 free promotion strategy.

Some tire dealers said that although the previous price increased greatly, the end consumption does not buy it. Soon to enter the peak season of tire sales, they must quickly seize the opportunity. Even we can earn a little, we would rather ship quickly, reduce inventory pressure, accelerate the flow of funds.

From the current global economic situation, prices are rising, mainly due to inflation. Although the price of rubber has fallen back, a price like 13,000 yuan/ton is still very high compared to the previous time when the price of rubber was low. Rubber prices still have a lot of room for price reduction, and industry insiders predict that rubber prices will drop to below 12,000 yuan.

In addition to the falling price of rubber, the prices of steel, carbon black, coal, oil, and chemical materials are all rising, and these are also affecting the price of tires to some extent.

The current China truck tyre price is being affected by various factors, but the possibility of a sudden plunge is unlikely. Perhaps with the late fall in raw material prices and tends to stabilize, tire prices will steadily fall back.

When can tire prices generally fall? Perhaps in June!