Perfect storm buffeting Europe’s PCLT tire manufacturing starting to ease in 2023
In the second half of 2022, a perfect storm of significantly lower freight costs and high European energy costs negatively impacted the relative competitiveness of ‘domestic’ PCLT tire production compared to PCLT tire imports from Asia. However recent movements in forward costs of energy look set to offer some relief.
Spot rates for container freight from Asia fell sharply in 2022, particularly between late June and December, making imported tires more attractive.
Gas prices began to climb sharply from June 2022, peaking in August. They remained elevated over the rest of the year, impacting the competitiveness of tire production in Europe.
Since March 2022, cumulative PCLT tire imports have been above the equivalent period of 2019, with a more substantial increase since June.
According to data compiled by Astutus Research, by the end of 2022 cumulative PCLT tire imports to Europe* were up around 8% year on year, and almost 6% higher than the same period in 2019.
The end of European imports of tires from Russia in July has resulted in a reduction in supply of around 6 million units in the second half of 2022 (principally Nokian and Pirelli). There was some stock building (principally by Nokian) prior to July, resulting in a spike in imports from Russia in June. Pirelli has stated that it has replaced Russian volumes in Europe with production in Romania and imports from Turkey. In 2023 there will be a shortfall of over 12 million tires from Russia, Ukraine and Belarus compared with the pre-invasion total in 2021.
Astutus Research believe that some tires that would previously have been exported from Asia to Russia, are instead being sold in Europe. Whilst European imports from China have increased, they have also risen significantly from Korea and Japan. European imports from Korea rose by 20% in 2022, an increase of over 3 million units. Volumes from Japan rose by 1.5 million units, or 28%. Companies such as Toyo, SRI, Yokohama, Hankook, Nexen and Kumho have traditionally been amongst the major importers to Russia. Japan and Korea have together typically sold 5 to 6 million units per year into the country.
*EU-27 plus UK. Astutus Research combines statistics from Eurostat and HMRC in the UK to show consistent data for the period before and after the UK exited the European Union.
The latest Astutus Research briefing, “Supply Dynamics in the European PCLT Tire Industry to 2028” is now available.
