Chinese tyre makers widen price rises; Hai'an to raise mining tyre prices by up to 10% from December

What changed? Hai'an Group announced on November 6 that it will raise prices of its entire Lu'an range of mining tyres (off-the-road, OTR) by 7% to 10% from December 1. According to China Securities Journal, orders covered by written purchase contracts signed before November 30 will still be executed at the old price. Hai'an said natural rubber and carbon black prices remained high and that exchange-rate swings, higher energy costs and a sharp rise in cross-border freight had pushed its manufacturing and delivery costs beyond what it could absorb. The newspaper describes Hai'an as China's largest maker of giant all-steel tyres and one of the world's four makers of giant off-the-road radial tyres.

Who else has raised prices? Tyreworld (轮胎世界网) reported on November 8 that Sailun raised its truck and bus radial (TBR) prices by 5% to 7% in one step from November 1, Jinyu lifted prices across its brands by 4% to 5%, and Guizhou Tire raised its whole range by 3% to 5% from November 10, with Giti, Prinx Chengshan, Yuelong and Sentury following. In October, Zhongce raised some all-steel sizes by 2% to 3% from October 16, Jianxin raised its TBR brands by 3% to 5% from October 25 and Prinx Chengshan raised all-steel and bias tyres by 3% from October 28, according to Tyre News (轮胎报). Tyreworld says the latest increases are larger than the 2% to 5% of earlier notices.

Do the notices cover export prices? None of those we read says so explicitly. Linglong's notice raised some TBR products for the domestic retail market by about 3% from November 1, and October notices from Huadong Rubber and Xiongying covered the domestic replacement market. Guizhou Tire's notice applies to all series of products from November 10 and states that it will not accept prepayments. Hai'an's notice covers the full Lu'an mining range and lists exchange rates and cross-border freight among its reasons. According to Tyreworld, several makers left room for further rises because the increases do not fully cover costs.

Why are prices going up? Costs. The China Natural Rubber Association, citing Longzhong data, reported that raw-material cost indices for semi-steel and all-steel tyres were up 29.98% and 30.17% year on year on October 10. As of October 29, the association reported a theoretical loss of 0.91 yuan per kilogram on a mid-range 205/55R16 passenger tyre and of 2.42 yuan per kilogram on an economy 12R22.5 truck tyre. Tyre News reported that natural rubber futures closed at 20,145 yuan per tonne on October 8, up more than 28% since the start of the year, and that the carbon black benchmark price was up nearly 60% from a year earlier.

Is demand pushing prices up as well? No. Zhuochuang Information said on November 6 that all-steel tyre plants in Shandong were running at 56.59% of capacity, 8.98 points lower than a year earlier, and semi-steel plants nationwide at 64.91%, down 9.54 points; raw-material prices had eased from their peaks but stayed high. In a survey of Shandong all-steel tyre dealers published on November 9, Longzhong found that 62.5% sold less in October, while factories limited output and sales and several common sizes were in short supply. It expects prices to hold but trading to stay weak in November.

What do export figures show? Volumes are growing, value is not. Customs data reported in October show that China exported 544.01 million new pneumatic tyres in the first nine months, up 1.7%, or 7.19 million tonnes, up 2.5%, while export value fell 2.4% to 119.8 billion yuan. Prices are rising across Chinese industry: the producer price index rose 5.7% in October from a year earlier.

CSP view: for importers of Chinese mining, truck or passenger tyres, the practical step is to ask each supplier in writing whether its notice applies to export price lists and from which date, and to fix prices in signed contracts before the effective dates where possible; Hai'an's cut-off is November 30. With prepayments refused by some makers and output of some sizes limited, buyers should also confirm lead times for their main sizes. This reading is ours, not the companies'.