Analysts: Tyre Makers to Raise Prices in 2010

Financial analysts expect tyre makers to increase prices between 5 and 8 per cent in January 2010, in part due to increased demand and supply shortages in some markets. The Morgan Stanley analysts once again singled out Hankook for particular praise and a “Buy” rating, saying: “After raising tyre prices by an average 7 per cent in the US in mid-October, Hankook is planning to raise average selling by…6 – 7 per cent in other major markets from early next year.”

Yokohama, Continental and Nexen have all announced plans to raise prices by 5-8 per cent from January next year, the analysts explained, adding: “Hankook is also scheduled to begin price negotiations with…OEMs this month and is targeting a 3 per cent average selling price increase. These price hikes should help it offset natural rubber price hike to a large extent.”

Despite the recent rally in rubber prices causing concern, the analysts pointed out that the price of synthetic rubber and tyre cord “appear[s] to be stabilizing and we expect the overall pricing environment to remain supportive in 2010.”

According to a Morgan Stanley investor’s note, industry demand bottomed out in the first half of 2009 and replacement demand in Europe and the US was up 6.4 and 9.7 per cent respectively in October. “We remain bullish on the volume recovery for the global tyre industry in 2010,” Morgan Stanley concluded.