Tyre prices may increase slightly as tyre manufacturers face rising costs in fuel and petrochemicals, according to industry experts, reported The Star. The tyre industry is facing clear upward pressure on production costs, said Malaysian Retreaded Tyre Manufacturers Association (TRMAM) president Wong Jin How.
“From a retread tyre manufacturer’s perspective, there is a clear upward pressure on prices. Our key materials, synthetic rubber and carbon black, are petroleum-based and largely imported, meaning that increases in crude oil and petrochemical prices directly impact our cost structure,” Wong said.
More than 50% of raw material costs are linked to crude oil derivatives, while recent supplier quotations indicate that prices have increased by more than 20%, he said.
“The impact is substantial and immediate. Any movement in crude oil prices directly translates into higher production costs. Additional petroleum-linked expenses such as solvents, plastics used in packaging, logistics and energy-intensive heating and curing processes have further added to cost pressures,” he continued.
Price adjustments are likely within the next two to three weeks, depending on how long the escalation of raw material cost and supply tightness persist, and the commercial vehicle segment, including lorries, buses and logistics fleets, is expected to be the most affected due to their high usage and reliance on retreaded tyres, Wong said.
Any increase in tyre costs will influence the wider supply chain as the vehicles are key to the movement of goods, the report wrote. Despite efforts to manage expenses, there are limited options to fully mitigate the impact of rising costs, Wong said.
“In the current environment, there are very limited options to mitigate cost increases fully, and some level of price adjustment is largely unavoidable. Supply uncertainties and market volatility have made it difficult for manufacturers to stabilise costs or build inventory,” he said.
Meanwhile, tyre manufacturers in China and Thailand have indicated price increases of around 4-5%, and local manufacturers are expected to follow suit, according to North Malaysia Tyre Association chairman Hoo Khun Khiang.
“The price of rubber and oil will greatly affect the price of tyres because we need a lot of oil to manufacture tyres,” he said, adding that commercial and transport vehicles are likely sustain the greatest impact due to their extensive daily mileage and frequent tyre replacements.
“While manufacturers are doing their best to manage operational costs as efficiently as possible, there are limited options to offset the rising expenses, and ultimately, consumers will have to make purchasing decisions based on their budget and needs,” Hoo said.
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