News story

Forklift tyre manufacturers under pressure

Thursday, 23 February 2006 ( #248 ) - BRISBANE, Australia
The escalating cost of natural rubber is giving forklift tyre manufacturers a headache.

Richard Blacker, of Bearcat Tyres Pty Ltd, Australia, said natural rubber cost about USD0.60 a lb (USD1.32/kg) in January 2005 but now cost USD1 a lb (USD2.20/kg).

He said forklift manufacturers did not understand the cost of tyre production.

"Most forklift manufacturers usually play one major tyre manufacturer against the other to have prices reduced. Once this is achieved, the tyre manufacturer reduces quality to align with the tyre price.

"The forklift manufacturer loses confidence when the tyre does not perform well and will then pay the extra money for a quality product with their original supplier," he said.

Phil Perry, from UK-based Watts Industrial Tyres, said a "panic buying" reaction among natural rubber users was common when commodity prices began trading out of norm.

"Most manufacturers forward buy to ease the effect of unusual trading but this has been difficult recently. Any unusual increase has an effect on company margins because it is difficult to gauge long-term pricing. In a market that is used to price changes annually, it is difficult to then move to a monthly change.

"Forklift manufacturers forward buy their OE requirements so any change [for them] will come later," Perry said.

Daniel Hanssens, founder of Belgian-based OMG forklift importer ACD Handling, said it wasn't just the cost of natural rubber that was increasing but other commodities, like steel and fuel.

"The problem for each manufacturer is to maximise production to reduce the final cost," he said.

Dan Zielinski, from the US-based Rubber Manufacturers' Association, said tyre manufacturers were concerned with price increases of all rubber materials.

The price of synthetic rubber had gone up, as had fuel, an ingredient in tyre manufacturing.

Tim Hubbert, from the US Industrial Truck Association's tyre, wheel & casters committee, said unfortunately the rising rubber pricing would continue and industrial tyre manufacturers would have to institute price increases.

Rubber Trade Association of Europe secretary-general Howard Evans said the market was now "volatile and erratic".

"Rubber prices have risen around 60 per cent during 2005 and we have seen a further rise of 17 per cent since January 1, 2006. Also, there has been increased risk of interruption of supply at some origins accompanying the price rise," he said.

Kelvin Banks, director of Australian forklift tyre specialist Solid Service, said the price of natural rubber for Malaysian grade SMR 20 achieved a record high of USD1.943 a kg on February 7.

He said China's increasing demand for raw materials put pressure on the prices of natural rubber and steel.
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