Analysts: US wholesalers de-stocking ahead of Chinese import tariff end

The latest figures from the US light vehicle replacement tyre wholesale markets suggest shipments declined 1.9 per cent in August, according to the RMA. However, financial analysts from Deutsche Bank believe there are “several factors contributing to temporary weakness in the market” and that wholesalers are currently inclined towards de-stocking (due to recent raw material cost declines, and the nearing end of Chinese tyre import tariffs. As a result many anticipate lower prices in the months ahead.

“Based on conversations with industry contacts, we also believe that some tyre makers may be staging imported Chinese tyres in bonded warehouses within free trade zones (tariffs are not due until they leave these warehouses). These will likely be released (and counted in the shipment data) once tariffs expire on Sept. 26. Overall, we are encouraged by increasingly favourable anecdotes on end-market (retail) demand, and we expect this to translate into stronger wholesale shipments in the months ahead,” the analysts explained in a research note dated 13 September.