Financial analysts expect European tiremakers to increase prices between 5% and 8% in January 2010, in part due to increased demand and supply shortages in some markets.
The Morgan Stanley analysts once again singled out Hankook for particular praise and a “Buy” rating, saying: “After raising tire prices by an average 7% in the U.S. in mid-October, Hankook is planning to raise average selling by…6%-7% in other major markets from early next year.”
Yokohama, Continental and Nexen have all announced plans to raise prices by 5%-8% from January next year, the analysts explained, adding: “Hankook is also scheduled to begin price negotiations with…OEMs this month and is targeting a 3% average selling price increase. These price hikes should help it offset natural rubber price hike to a large extent.”
Despite the recent rally in rubber prices causing concern, the analysts pointed out that the price of synthetic rubber and tire cord “appear[s] to be stabilizing and we expect the overall pricing environment to remain supportive in 2010.”
According to a Morgan Stanley investor’s note, industry demand bottomed out in the first half of 2009 and replacement demand in Europe and the U.S. was up 6.4% and 9.7%, respectively in October. “We remain bullish on the volume recovery for the global tire industry in 2010,” Morgan Stanley concluded. (Tyres & Accessories)
