Tire materials costs trending higher

Most, but not all, tire makers expect significant rises in the cost of key feedstocks and rubber raw materials

London – Major tire manufacturers are mostly predicting significant rises in the cost of crude oil-based feedstocks and raw materials for this year.

For the full-year, Continental AG expects a €50-million negative impact due to increases in oil and synthetic rubber prices, the group said in its 2018 half-year results, issued 2 Aug.

Continental had previously forecast effects from raw-material prices to be nearly balanced for the Rubber Group, which comprises its Tire and ContiTech divisions.

With the average price of North Sea Brent crude oil up from $54 per barrel to $71 per barrel in the first half, costs for carbon black and other chemicals are now expected to rise by over 10% compared to average prices in 2017.

For butadiene, the main synthetic-rubber feedstock, the company increased its forecast for the average price across the year from $1.51/kg to $1.60/kg.

For natural rubber prices, however, the company expects the average price to be below the previous year’s level: $1.44/kg, compared to $1.67/kg in 2017.

Headwinds

Increasing materials costs were among the headwinds facing Goodyear at the half-year point, according to its chairman, CEO and president Richard Kramer.

The Akron tire maker blamed a 20% drop in first-half segment operating income, to $605 million, on the effects of higher raw material costs and reduced price/mix.

 

ERJ subscribers can read the full report here.  If you are not yet a subscriber to our print and online publications please click here.