A March 11 report from DB Equity Research Automotive observes that the cost of "certain key raw materials" used by tire manufacturers have begun to decline.
The Deutsche Bank equity research team states: “Most notably, we estimate that natural rubber prices have declined by 9% since last Friday…and rubber has declined by approximately 15% (from the $2.45-$2.50/lb. level) since U.S. tire companies reported their Q4 results. If this decline in natural rubber costs is sustained, total raw material costs could decline by 4% compared with Deutsche Bank estimates.”
The report also shows light vehicle replacement tire shipments in the U.S. to have increased 1.2% year-on-year during February for Rubber Manufacturers Association members and 5.4% year-on-year for the overall industry.
The Deutsche Bank automotive equity research team comments that “while the increase is modest versus the 12.8% year-on-year seen in January, we would note that January shipments likely contained some pre-buying ahead of recent price increases. We also noted that the comparison against February 2009 (+17%) was significantly harder than January 2009’s +8.3% comparison. Overall, we continue to expect FY2011 industry growth in the 3% range.” (Tyres & Accessories)
