In the vortex of high tide, what are the characteristics of tire prices since 2018?

In 2018, the tire industry was “up” and again and again, continuing the trend of price increase over the past 17 years. Many companies are already “up and down”, “three consecutive up”, and even “N up”. From large brands to small businesses, they have resorted to "advancements". Faced with a "rise" sound, tire people can not be puzzled: why is still rising? In the end is really want to rise, or is it hype?

Let us release a picture first to see which companies have increased their prices since 2018:

Tire companies that have increased their prices since 2018

Why are tire manufacturers unanimous?

Looking at the reasons for the price increases of these corporate announcements, without exception, they all indicated that “the recent increase in raw material prices” “the profit margin of products has been compressed.” “In order to provide better services, we decided to increase product prices and improve profitability.” Indeed, the trend of the raw material market in recent days is not optimistic:

In order to improve the surplus of rubber supply and protect the interests of its rubber farmers, Thailand, Malaysia, Indonesia and other major exporters of natural rubber are seeking concerted action to increase raw rubber prices by reducing rubber tree planting and reducing tapping volume.

High natural rubber imports and high tariffs. Since the second half of 2017, domestic imports have been rising rapidly. In January 2018, China's natural rubber imports reached 564,800 tons, an increase of 44.48% compared with January 2017. On the other hand, China has a high import tariff on natural rubber. Natural rubber imports under China's general trade tariffs are levied at 20%, second only to India's 25%. Interestingly, China and India are the only countries in the world that impose tariffs on natural rubber. In contrast, tire manufacturing giants such as the United States, France, Germany, and South Korea all implement zero-tariff policies.

The “Environmental Protection Comprehensive List (2017 Edition)” issued by the Ministry of Environmental Protection defines the major domestic rubber additives as “high-risk and high-environmental risks” “double high” products. Under the current environmental high pressure, this certainty will have a huge impact on additive manufacturers. It is worth noting that according to regulations, "double high" products will not be able to enjoy such benefits as export tax rebates, which is even worse for auxiliaries. All in all, the price of rubber chemicals will remain high in the short term.

Raw material manufacturers such as carbon black, rubber chemicals, and cords were also deeply affected by the environmental supervision. They have raised the price of their products, causing their prices to remain high. Tire pictures

Is it hype or real?

The reason why this round of price hike has attracted much attention is that the major players in the industry are leading the industry. Since there is no shortage of domestic and international brand companies such as Ma Brand, Double Star, etc., there is no shortage of exquisite leading companies such as Linglong . This shows that the rise in raw material prices has indeed caused tremendous pressure on the entire industry.

The questioning of “hype” mainly comes from many small businesses that are not seen in the form, and several of them can be seen at each price increase, which also raises the question of “hot”. However, market analysts believe that the actual situation may not be the case. These small companies lack visibility and are only concerned with the overall acceptance of market consumers; they do not lack a certain market share in each segment. The reason why the followers call for “rising” may be due to two considerations. From the bright side, it is an opportunity to jump out of the price war and improve the revenue; from a deeper perspective, it is an opportunity to “crush” those who are not as good as them. Workshops to seize low-end market share. To be a brand and to be a channel, it is difficult for these small companies with limited strength to follow suit; following the general direction, taking the initiative to increase prices, and taking the opportunity to increase the “exposure”, it may instead be a strained expedient.

What needs to be reminded is that in the face of price, big companies have enough money to fight price wars, and there are also solid channels to deal with price increases. On the contrary, small businesses are more like “tightrope” in front of prices, too cheap to earn, too expensive to buy. If we cannot accurately grasp the heat of price increases, large-scale high tides may completely eliminate their competitive advantage. With the increasing weight of large corporate brands, the business situation of these companies will be very difficult.

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