Analyst: Tough Road Ahead for Truck Tire Market

2016-10-10

At the 2016 Specialty Equipment Market Association (SEMA) Show, the tough market environment was on the minds of commercial tire dealers and manufacturers. The good news is there's an expectation for a turnaround in the first half of 2017.

Nick Mitchell, senior vice president of research for Northcoast Research Holdings LLC andModern Tire Dealer columnist, says dealers and manufacturers both talked about the challenging operating environment in recent months. They pointed to a pair of factors:

Ongoing weakness in original equipment orders. (It's down about 20% year-to-date.)

Heavy pre-buy activity ahead of the preliminary anti-dumping and countervailing tariffs on truck and bus tires imported from China.

Mitchell says, "The former is pressuring margins, especially on product that is imported from China in light of the fact that cash deposit rates of around 30% are being applied to all imports (preliminary AD/CVD tariffs total about 50%)."That said, most contacts expect pricing to firm materially in late first quarter of 2017 or early second quarter of 2017, as many (SEMA Show) attendees noted that the global market needs the TBR capacity that is in China given the fact that there is not enough production output in the rest of the world to fill the gap."