Tyre Market

Consumer

The global market for tyres in the car segment was 1,342 million units in 2011, with an increase of 4% from 2010, when it had increased by 10%.

Growth in the premium segment was sustained, with a 15% increase in 2011. In Europe, the demand for original equipment and replacement tyres grew at the same rate of 3% in 2011. In NAFTA countries, the original equipment tyre segment posted an increase of 10%, while the replacement tyre segment softened in the H2 2011 after a strong first half performance. Growth in South America was 2% in the original equipment segment, while sales of replacement tyres remained steady at their 2010 levels.

After an expansion of more than 30% in both segments in China during 2010, sales there rose by only 2% in the original equipment segment, while sales of replacement tyres rose by 12%. In Japan, the collapse in automotive production produced a decline of 13% in tyre sales to the original equipment market in 2011, while the replacement tyre segment continued to expand at a pace of 8%.

Industrial

The global radial truck tyre market reached an estimated 135 million units in 2011, an increase of 7% over 2010.

In Europe, sales to the original equipment market continued to be robust. On the other hand, the replacement market was flat in 2011 following a jump of close to 20% in 2010. NAFTA countries saw original equipment tyre sales rise 55% while the replacement market expanded by 3% in 2011.

In South America, original equipment sales were up 11% in 2011 after a 47% increase in 2010. After a boom year in 2010, when replacement tyre sales rose by 23%, sales fell by 1% in 2011. In Asia, tyre sales to the Chinese original equipment market contracted in 2011 as incentives which boosted sales in the previous two years came to an end. The replacement market rose slightly, by 1%. The Japanese original equipment market fell by 2% in 2011 while the replacement market continued its recovery posting a 7% increase in tyre sales.

 TYRE SALES   CONSUMER MARKET   2009  2010  2011 
 Europe*   Original equipment    -19%   13%   3% 
   Replacement   -4%   8%   3% 
 NAFTA   Original equipment    -32%   39%   10% 
   Replacement   -3%   4%   -1% 
 South America**    Original equipment    -1%   13%   2% 
   Replacement   7%   11%   1% 
 China   Original equipment    47%   31%   2% 
   Replacement   20%   31%   12% 
 Japan   Original equipment    -32%   20%   -13% 
   Replacement   -8%   9%   8% 
 TYRE SALES   INDUSTRIAL MARKET   2009  2010  2011 
 Europe*   Original equipment    -64%   57%   32% 
   Replacement   -14%   18%   -1% 
 NAFTA   Original equipment    -36%   30%   55% 
   Replacement   -13%   18%   3% 
 South America**    Original equipment    -25%   47%   11% 
   Replacement   -9%   23%   -1% 
 China   Original equipment    28%   53%   -15% 
   Replacement   16%   10%   1% 
 Japan   Original equipment    -49%   37%   -2% 
   Replacement   -21%   14%   7% 
* includes Turkey, excludes Russia. ** Argentina, Brazil and Venezuela. Source: Pirelli estimates

Commodities

Natural rubber prices hit historic highs of over US$ 5500 per tonne in the first quarter of 2011, driven by a recovery of demand. Afterwards, the earthquake in Japan disrupted global automotive production, a major source of global rubber demand, with a consequent decline in natural and synthetic rubber prices. The general slowdown in economic growth in Europe, the United States and China exerted adding downward pressure on prices, which were also adversely affected by floods that damaged several car plants in Thailand during the second half of 2011. At the end of the year, natural rubber prices recovered to more moderate levels of around US$ 3200 per tonne.

Crude oil price rose at the beginning of 2011 in response to uprisings in the Middle East. Brent prices rose from US$98/bbl in January to US$123/bbl in April. The end of the conflict in Libya and concerns about the slowdown in global growth caused oil prices to fall back to US$108/bbl in December 2011.

Butadiene (the principal input for synthetic rubber) also increased during 2011 reaching its peak in the summer and experiencing a sudden drop in Q3 and Q4. By December, butadiene prices had dropped to euro 1650 per tonne (Europe contract, equivalent to US$2170 per tonne), similar to April 2011 levels.

Rubber and butadiene Prices, US$ per tonne

Rubber and butadiene Prices, US$ per tonne

Source: CMAI, IHS Global Insight