by Mike McCarley on September 1, 2010
IS ONE OF THE WORLD’S LARGEST TIRE BUILDERS READING OUR BLOG ?
BAOR Press Release:
Bridgestone Americas increasing OTR tire prices
Bridgestone Americas’ Off -The Road Tires Sales division (BAOR) is raising prices as of September 1st.
The increase will affect all mining, construction and industrial tires sold by the company.
The increase, ranging from 2 to 7 percent, with some in-line adjustments, covers products sold in the U.S. and Canada.
“We continue to search for new, innovative and efficient ways to bring the best product for the best price to all dealers,” said the President of BAOR. He continued: “At this point, we’ve been unable to completely offset rising raw material, energy and transportation costs with improved efficiencies, and therefore, we find it necessary to increase prices on our off-the-road tires.”
Bridgestone last raised OTR tire prices April 1, by up to 4 percent.
You can be sure that this increase by Bridgestone will be echoed in some form by their peers Goodyear and Michelin. And this announcement must be music to the ears of Titan, Belshina, Triangle and Eurotire, just to name a few – who are in the same boat struggling to control rising costs and remain profitable.
Because they are forward looking, most of the biggest global mining and construction companies have already established commitments from the big 3 for their projected tire needs. And that is having a notable effect on production, quantities, and scheduling.
Companies finalizing plans to open or expand operations over the next couple of years (who do not have tire supply contracts in place) must start preparing now for the sticker-shock they are going to face while trying to secure tires in the open market. Prices for 57 inch major brand tires have doubled on the open market during the last 3 months! And 49, 51, and 63 inch tires are up 20 to 50 percent over the same period. Where are we headed?
by David Travis on August 27, 2010
The other day, Mike and I were discussing how the current prices various metals is affecting the mining industry. Gold, at record prices, was an easy one to agree on. I can remember in 2002 while managing a gold mine sitting with the planning and operations department someone waving at an area of the map and commenting “if gold was $350 an ounce all this would be economic”. Well today I guess that rock that we had to leave behind is being mined.
But copper stumped us. I do take notice of the copper price but do not keep up on settlements, futures, or check inventories. I did recently read one interesting article on Kitco reporting that LME warehouse stocks have declined significantly from Feb highs and after a surge of copper into the Shanghai warehoused copper listings in March the stocks have since declined significantly too. This was contrary to projections for a small surplus of new supply. Okay – basic supply and demand scenario being painted here. I think I can follow along. Since it is noted that supply is shrinking the question must be whether demand will be high enough to push the prices up? The report concludes that “We are entering a long period in which individual supply/demand fundamentals rather than economic stats will focus metal pricing. Copper’s supply side is tighter than most other commodities. [1]
This morning, perusing the headlines I noted two very contrasting headlines regarding copper, published on the same date, on the same news network.
One report, Copper May Decline Before U.S. Economic-Growth Report, Speech By Bernanke (Bloomberg, by Chanyaporn Chanjaroen – Aug 27, 2010), informs that any signs from Bernanke on measures to stimulate the U.S. economy would be positive for industrial metals. That is because there have been mixed reports this week on the outlook of the U.S. economy with orders of durable goods less than forecast and sales of both existing and new homes weaker than estimated. The take home message was: “The likelihood is that the market will be disappointed, as the Fed probably hasn’t decided on more measures themselves and a lack of clarity would pressure prices.
The other report, Copper On Track For Weekly Advance On China Demand Outlook (Bloomberg, byGlenys Sim, – August 27, 2010), claims that copper prices have gained and are headed for a second weekly advance. There is optimism that demand will improve in China, the world’s largest user, as the weak consumption season ends. Prices rose to a one-week high in Shanghai. Luo Dayun, a trader at China Rising Futures Co. contributed his two-cents and said; “The market will consolidate at these high prices until a clearer consumption picture emerges in the fourth quarter”. He also added that recent data highlight uncertainties still exist in the economy and this will keep rallies in check but once prices go up; price-sensitive Chinese buyers will start to make hand-to-mouth purchases, so support from the physical market is reduced.
Apparently agreeing with Luo, the December-delivery contract on the Shanghai Futures Exchange gained for a second day, rising as much as 0.9%.[2]
Hmmm, one envisions that the impending US economic report may cause the decline of the price of copper – due to poor stimulation of the US economy. And another report that copper prices will continue to advance based on the optimism that demand will improve in China, the world’s largest user. I don’t know, what do you think?
[1] Eric and David Coffin,
Smoke from the Copper and Gold Markets, Aug 16 2010
[2] http://www.businessweek.com/news/2010-08-27/copper-on-track-for-weekly-advance-on-china-demand-outlook.html
