Dead or Revival? -Forecast of Chinese tyre business in April& May

Due to the raw material surge since last 2020, the average cost has increased about 25% since last October. Considering raw material cost account for 60% of tire prices, thus the increasing should be around 15% eventually to offset the raw material cost bounced.

The phenomenon leads to a unrealistic booming of China tyres’ sales, either in China or overseas. As every one want their purchase before increasing. Take overseas market for example, the Ramadan is coming for Muslim world (April 12th), most buyers are engaged in preparing their orders in advance despite of the sky high freight cost plus sleepy business caused by COVID-19.

However, prices increasing triggered by cost will be vulnerable without solid market demands.

I foresee Chinese tyre prices will be cooling down in late April or May because the slow recovery of global economy won’t catch up with the step of prices surging. Plus the huge stocks prepared will not be digested significantly prior to the revival of global economy, when the vaccine would have played a crucial role.

Tyre business is like an mirror of global economy. Hard as it is temporarily, but prosperity will come soon as long as we have strong belief to embrace the brightness of future.

Originally by

Kobe Wang