India
Natural rubber prices have been the bane of tyre makers in India of late, and on November 12 the New Delhi based Financial Express reported that major tyre manufacturers in India are considering production cuts to minimise on losses arising from prices that have risen above Rs 200 (£2.77) a kilogram.
Upon announcing Apollo Tyres Ltd’s results for the second quarter and first half of the current Indian financial year, company chairman Onkar S Kanwar commented “it’s been a very difficult six months managing the unprecedented rise in natural rubber prices.” This is perhaps an understatement; Kanwar noted the company’s natural rubber costs have risen 70 per cent in the last year and 150 per cent in the space of two years – a significant amount, considering the commodity accounts for 60 per cent of Apollo’s raw material costs. “This has affected all aspects of our operation.” Kanwar added. “I do hope the Government will look at some measure to check speculation, as well as bring down the unreal duty structure we have.”
Apollo Tyres has demonstrated it is moving towards its goal of becoming a global player and entering the top 10 within the next five years with the news that it has joined the list of globally approved suppliers to German car marque Volkswagen. However the prestige associated with VW's global OE approval of Apollo's tyres is multiplied by the fact that the company has been selected to supply the replacement to VW's compact Fox model, known as the “Up”, which can be described as a European OE contract. This mini model is expected to be produced at the German carmaker's Brazil plant, where the Fox was previously constructed.
According to the Calcutta Telegraph, the Calcutta-based Ruia Group and Japanese tyre manufacturer Sumitomo are engaged in talks concerning the construction of a radial tyre factory in India. It is reported that the joint venture would cost around 500 crore rupees (US$113 million) and would either be a 50/50 project or with Sumitomo taking a majority holding.
Stoke-based Daily Tyres, a new mainland venture from Eamon Daly of Daly Tyres (Limerick), used the recent Brityrex show to publicise the enhanced availibility of the Westlake in the Midlands and North of England. The Westlake brand was featured on Eamon Daly’s rally racing car which was prominently on display in the main entrance to the tyre show.
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Having raised the prices of its US passenger and light truck tyres by 6.5 per cent, Cooper Tire has told analysts in a conference call that the manufacturer expects raw materials costs to rise into 2011, as suggested by reports in the Financial Times and on tyrepress.com yesterday. Increased demand from automotive suppliers, especially in China and India, alongside unhelpful weather conditions in the rubber tapping season in south-east Asia have driven natural rubber prices continually upward in 2010.
A new report by Global Industry Analysts suggests that the synthetic rubber market will climb to 13.4 metric tons by 2015, “particularly” on increased usage in the tyre and automotive industry. The consumption and production of synthetic rubber was significantly affected by the global economic recession, says a statement by GIA announcing its new publication: ‘Synthetic Rubber: A Global Strategic Business Report’.
Tire Review reports that specialty chemicals firm Lanxess predicts an increase in demand for synthetic rubber in India, a country the company said has a long history in the production and consumption of natural rubber. “Driven by the needs of rapid modernisation, India is currently undergoing a shift toward replacing natural with synthetic rubber in a variety of applications,” the company said.
Michelin has reported that its net sales for the first three quarters of 2010 shot up 19.4 per cent to 13 billion euros. According to the company, the growing figures reflect increased unit sales growth across all sectors and follow a particularly sustained recovery in unit sales of passenger car and light truck tyres. As a result of the good third quarter figures, Michelin reaffirmed is predictions that the company would achieve around 12 per cent growth in unit sales by the end of 2010, “close to 9 per cent operating margin before non-recurring items” and positive free cash flow for the year.
Referring to the company’s third quarter sales of 4.65 billion (which were up 24 per cent year-on-year), financial analysts praised the fact that the results were 6 per cent ahead of consensus estimates. However, writing in an investor’s note published 27 October, Morgan Stanley analysts wrote that this figure was largely down to better-than-expected foreign exchange rates. Sales growth is said to have equated to +15 per cent excluding foreign exchange effects during the quarter.
Sun Tyre & Wheel Systems, part of the $6 billion TVS Group of India, has completed the acquisition of Watts Lanka Private Limited, the firm’s solid industrial tyres manufacturing company in Colombo, Sri Lanka. No details of how much was paid for the company or of the extent of the new owner’s expansion plans have been released.
Announcing the news Sun Tyre & Wheel Systems said it is “dedicated to serving the world’s material handling industry with a wide range of tyre and wheel solutions covering most applications and operating environments.” Watts Lanka Private Limited (which will be renamed shortly) was a joint venture between Watts Tyres Limited of the UK and KVK Invest JSC of Bulgaria, principal shareholder in Balkancar Zarya PLC. One insider told Tyres & Accessories that, as the sale relates to a purchase prior to Watts’ recent buyout, this had been considered as an option for some time.
Continental AG chief executive Elmar Degenhart has shared details of how the automotive supplier is planning to invest 500 million euros into its tyre business in an interview Germany's Frankfurter Allgemeine Sonntagszeitung newspaper. According to the report, Degenhart admitted that Continental should have invested more in its tyre division during the past five years.
The period between April and August this year yielded a 29 per cent increase in domestic tyre production in India on the back of a sharp rise in automobile sales, according to a report published by Business Standard. This rise is made even more impressive when one considers the spiralling natural rubber prices in the same time-frame. The report states that the major tyre manufacturers produced 47.1 million tyres in April-August 2010, as opposed to 36.7 million in the same period of 2009.
Automotive Tyre Manufacturers’ Association (Atma) reportedly sought suspension of futures trading in natural rubber (NR) on 20 October. According to India’s Business Standard newspaper Rajiv Budhraja, director general, ATMA wrote to the Forward Markets Commission (FMC) and the Rubber Board after rubber futures went up by 5 rupees for the November contract in one day reaching 191 rupees/kg from 186/kg earlier. By 20 October NR futures are said to have risen to 200 rupees/kg.
Jointly organised by CEMS USA, CEMS INDIA, a leading multinational exhibition organizer of South & South-East Asia and CCPIT-Auto (China Council for Promotion of International Trade – Automotive Sub-Council), the Singapore International Auto Parts Expo 2010’ [SIAPE 2010] reports that it is set to be Asia’s latest platform, which is seeing a “revolution in the sales of Automobiles, for global players to assemble in the remarkable Asian business hub – Singapore.”
Ceat has reportedly increased tyre production capacity at its Nashik, India plant by over 1,000 tonnes a month. The plant produces truck, light commercial vehicle (LCV) and agricultural tyre products. Local news reports said that as a result of the expansion the Nashik facility’s truck tyre capacity has increased by 1,700,000 units, LCV tyres by 96,000 units and rear tractor lines by 50,000 units annually.
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