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February 09, 2017 12:00 AM

Tire price rises continue in Europe

Shahrzad Pourriahi
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    London – Higher costs of raw materials, particularly natural rubber, has prompted further price rises by major tire-makers in Europe.

    While Michelin announced an 8% increase in prices in Europe earlier in February, Goodyear is now planning a similar increase for consumer and commercial tires sold in the region. Continental is also moving to offset the impact of higher costs on its products.

    During a fourth quarter conference call on 8 Feb, Goodyear CEO and president Richard Kramer said the price rise would be 8% and effective as of 1 March.

    “Since our last earnings call, there’s been a swing [in natural rubber prices] from the lowest 57 cents per pound to a peak of $1.4 per pound as recently as last week. An increase of an astounding 55%,” said Kramer.

    But citing “significant volatility” in commodity costs, the CEO said Goodyear’s hike was not due exclusively to higher natural rubber prices.

    “Raw materials costs are about more than just natural rubber, with challenges coming in a broad cross-section of commodities,” he said.

    For example, Kramer said prices of key commodities, such as butadiene and carbon black, had risen to 52-week highs in recent weeks.

    Looking ahead, he said that Goodyear expected raw materials costs to stay at heightened levels in 2017.

    Also, in response to ERJ’s query, German tire-maker Continental said it was “implementing necessary increases step-by-step following detailed analysis of our cost situation.”

    In recent quarters, said Conti spokesman Alexander Bahlmann, the company has had to adjust prices in several markets in Europe and the Americas “predominantly in response to the significant negative impact of foreign exchange effects on our cost situation.”

    On top of this, he noted, since the final quarter of 2016 the purchase prices of key raw materials for tire production, such as synthetic and natural rubber, in particular, had risen substantially.

    “This is leading to considerable additional costs for the Continental Tire division, which we currently expect to amount to more than €400 million for 2017 in total,” the spokesman added.

    According to Conti, as the various cost impacts on products and markets are very different, the company “will not apply [increases] across-the-board but rather [announce] individual price adjustments.”

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