As each month passes the Global OTR situation reaches a new level of complexity.
With the huge attention that global commodity prices are attracting we can not turn our heads at the newest addition to the family… OTR Tires. Although not officially defined as such, OTR Tires now display the aggressive characteristics of rapid growth commodities. As global demand continues to rise behind China and India’s massive appetite, tire prices are racing through the roof.
Also consider the Natural Rubber shortage and its recent setback with severe flooding in Thailand – the world’s largest producer and exporter of what can now be considered “black gold”. With almost 50,000-Tonnes delayed in shipment and 1/10 of March’s production (20,000-Tonnes) lost in the floods, we now find ourselves entering rubber production’s “wintering” period with a high level of unknowingness. One thing we do know is that rubber prices will be expected to skyrocket driving tire prices even higher.
Our global community also experienced the devastation of the Earthquake/Tsunami in Japan. Our thoughts go out to those lives effected by this horrific natural disaster. Major tire manufacturers Bridgestone, Yokohama, and Toyo have since been battling inconsistent power supplies making running at full capacity a general production nightmare. As the situation worsens with the current nuclear problem many are starting to question how long it will take for these manufacturers to get back to “normal” production and supply of tires. This slow-down in supply will certainly continue to tighten a market already in desperate need.
As supplies continue to dwindle we have been introduced to the “no serial number” scenario. Quite common during the last shortage, many tires were sold without serial numbers. Up until the end of January most tires sold on the open-market were offered with serial numbers although that no longer remains the case. Based on our evaluation about 70% of tires now offered are without serial numbers and this figure will continue to grow at a rapid pace right along with pricing.
Needless to say the market continues to shift on a daily basis. We encourage all end-users to take a hard look into the future to avoid being stuck without tires when it matters most. Those mines that make decisions NOW will be those in the best position to continue to capitalize on high commodity prices into the future.