If you are in the market for new tires, then be prepared to face higher car tire prices. The rising prices are due to a rubber shortage blamed on a drought that occurred earlier this year and heavy rains which affected tree tapping operations in Asia. Analysts say that global rubber production will fall behind expected demand for at least two more years.
It is expected that global consumption of rubber will rise 9.4 percent in 2010 to 10.31 million tons. This marks the fastest increase since 2004. It is also expected that demand will be greater then output by 60,000 tons. In contrast, analysts say that there was a surplus of rubber of 237,000 tons last year.
Demand for tires will be increasing because of the rise in world auto sales. Reports say that sales will increase 8 percent to 68.5 million units this year and 7.2 percent to 73.4 million units in 2011. Tire makers are saying that they have to raise prices because of the higher costs for them. Bridgestone will raise tire prices in Europe starting in October by about 6 percent. Goodyear and Cooper Tire said they would raise prices by about 6.5 percent.
Tire prices are not just starting to rise now. They have been increasing since about the spring of last year. Reports were appearing in tire and rubber trade publications and websites about price increases last May. Silive.com, a New York website, published an article in December 2009 explaining that the price rise then was due to tariffs on imports, lower supplies and higher demand.
Finally, a report on New Tang Dynasty Television in July of this year, which appears on YouTube, explained that price increases of tires in India were forcing the tire industry in that country to ask the government for some kind of assistance. Tire companies were increasing their prices, but they argued that the increases did not meet the costs they had to spend. The price of rubber in India, which accounts for about 40 percent of the tire, increased three times between January and July of this year. Actual cost of rubber jumped by one-third in India since January.