Carbon black and gas prices push tyre manufacturer supply situation to a head

Russia’s attack on Ukraine is now impacting Europe’s leading economies and specifically Germany. For those producing tyres, hoses, seals or health protection products, the situation is particularly series due to the duel effects of tight carbon black supplies and rising energy and specifically gas costs. “Carbon black is an indispensable material for production and so far more than a third comes from Russia,” explained Boris Engelhardt, general manager of the German Rubber Industry Association (WdK) in Frankfurt am Main, according to our sister publication reifenpresse.de.

“Russian deliveries are failing and the European capacities are not sufficient to cover the demand. In addition, European [carbon black] productions are largely fed with Russian gas, so that there is a double risk situation, Engelhardt continued.

In addition to problems with Russian carbon black supply, skyrocketing energy prices are compounding the pressures. The rapid increases in production costs can no longer be passed on to the market. In Italy and France, the first rubber companies had therefore stopped their production without further ado. According to Engelhardt, it is only a matter of time before companies in Germany have to pull the ripcord.

“The German automotive suppliers in particular are massively affected,” emphasizes the WdK general manager. “You are still in COVID crisis mode, the components ordered in 2021 were not accepted by the automotive groups due to downtimes. The capacity planning got completely out of hand. And now the whole thing is being repeated and superimposed by the Russian declaration of war on Ukraine.”

If it used to be semiconductors (chips) that brought automobile production to a standstill, now it is cables from the Ukraine that have led to the sudden stop. It is precisely the unpredictability in dealing with the new shutdowns that is acutely endangering the existence of automotive suppliers. “Two weeks ago, the WdK therefore appealed to the CEOs of Mercedes Benz, BMW, VW, Ford and Opel to adjust their crisis communication with their suppliers and to seek a fair balance of interests. In a situation like this, you can only survive in close dialogue with one another,” Engelhardt concludes.