The High Cost of Tires

The price of tires has jumped dramatically in recent years, and part of the reason is
due to the increase in prices of raw materials.
April 2013, TruckingInfo.com - Feature
by Jim Park, Equipment Editor - Also by this author
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Ten years ago, you could buy a decent steer tire for $300. Not anymore. But, then again, you're not
buying the same tire anymore either.
Long-term pricing trends show that the cost of raw materials used in tire manufacturing has gone up
over the past decade, along with the shelf prices for tires, but consumers haven't seen the price
swings for tires that manufacturers have seen for materials over the same period of time.
And raw materials are only part of the tire's cost structure.
In a normal year, raw materials make up about 50% of the cost of the commercial tire, says Rick
Phillips, director of commercial sales at Yokohama Tire Corp. That includes natural rubber, synthetic
rubber, carbon black, steel and a host of other organic chemicals, including petroleum.
Phillips says natural rubber was selling for 56 cents a pound in 2009. Today it's around $1.50 per
pound.
Accord to price charts posted on a government of India website,www.rubberboard.org, prices for
various grades of natural rubber have increased from $135 per 100 kg in 2004, to a current price in
March 2013 ofabout$290.
Steel prices, while essentially stagnant over the past year at $700 to $800 per metric ton, have seen
significant swings over the past 10 years. Most types of steel saw price peaks of $1,000 and higher
per ton in 2008, which was up dramatically from pre-recession pricing of $500 to $600 per ton for
most products.
And don't forget oil prices.
Oil prices in 2003 averaged $27.69 per barrel in 2003 dollars. Today, prices hover in the $90s,
another significant increase. This hit tire manufacturers two ways, first as a raw material in tire
production, and again in shipping costs, especially for those bringing tires here from overseas.
Less tangible but omnipresent are the research and development costs. Phillips says tire makers
were making very good tires 10 years ago, but they can hardly compare to today's tires.

Tires are so much more efficient today than in previous generations that while acquisition costs have
increased, life-cycle costs and cost per mile have actually come down. You're getting way more bang
for your buck, Phillips says. But at the same time, it's getting harder and harder to make significant
strides in technology.
Now, tires are so efficient and so well-built that we have to spend millions and millions of dollars to
get just a small gain, he says. The development curve isn't as steep as it was. You have to go a
long way to even move the needle today.
Supply and demand
Global demand for tires has increased, with countries like India and China putting more and more
trucks on the road every year. Demand in North America and in Europe is down somewhat.
That reduces the pressure on supply, although Phillips says much of the need for tires in emerging
markets is filled domestically.
We've got a bit more supply here than demand at the present, he says, But by the end of the year
and through 2014, I expect that will change. When global demand picks up again, we'll have
problems here because there's not enough North American capacity to meet demand. And when the
commodity brokers see that, we'll probably see more price manipulation like we did in 2011.
In the short term, Phillips expects prices to stay relatively flat, but when global demand starts to rise,
tires and their raw materials costs will start going up right alongside.
Steel is more stable than rubber, and rubber is more stable than oil, but each is subject to its own
pressures, he notes.
The good news, according to Goodyear, is that raw materials pric ing has been stable over the past
few months. That doesn't mean we'll see discounts on tire prices, but they may not be jumping as
frequently as they have over the past few years. Enjoy it while you can.
Natural rubber is havested from the hevea trea as a liquid, much like maple syrup is harvested from a maple tree.

Alternatives to natural rubber

Although we're in no danger of running short of our primary source of natural rubber, prices have
risen dramatically over the past 10 years and some companies are now looking for alternatives.
The primary producers of natural rubber are in South and Southeast Asia, with some production in
tropical West Africa.
All those are places subject to damaging seasonal monsoons and other extreme weather
conditions.That makes supply a little unpredictable.

Rubber has also recently become a traded commodity, leading to speculative investment, which has
driven up prices.
It's not unlike petroleum markets, says Bill Niaura, Bridgestone Americas'director of new business
development. There are price points where it begins to make economic sense to explore and drill
for oil in non-traditional areas. We're now at the point in the rubber industry where it makes sense to
look for alternatives.
There are about 2,000 plant species producing natural rubber, but the Hevea tree is the most
productive. In the history of the rubber business only one other species, guayule, has been used in
actual rubber production.
Unlike the hevea tree, which grows in tropical climates, guayule grows in the arid climates of the
U.S. Southwest.
Active research and development programs are under way to domesticate and commercialize
guayule, with two led by tire manufacturers.

Guayule blooms again

A consortium consisting of Cooper Tire & Rubber Co., Yulex Corp., Arizona State University and the
U.S. Department of Agriculture are working under a $6.9 million grant from the USDA and the U.S.
Department of Energy.
The goal is to harness biopolymers extracted from guayule as a replacement for petroleum-based
synthetics and tropical-based natural rubber used in the manufacture of tires.
Meanwhile, Bridgestone has its own plans for a guayule research farm near Eloy, Ariz., and a
research center in nearby Mesa,Ariz.A 281 -acre agricultural site in Eloy will serve as the base of its
agricultural research operation, and will supply guayule for the company's process research center in
nearby Mesa.
Material-wise, guayule is the same polymer as hevea rubber, but it diversifies our supply, Niaura
says. In terms of plant biology and regionality, it's domestic to the Americas, but there are still
challenges ahead.
The facility is expected to be fully operational in 2014, with trial rubber production starting in 2015.
Regular pressure checks are the best way to ensure a long and prosperous relationship with your tires.

Tires are worth looking after

It's easy to dismiss tires as low-tech commodities requiring more time and effort to maintain than
they are worth.The truth is you get out of your tire program what you put into it.

Fleets with strong tire programs treat tires as assets.According to Continental's Clif Armstrong, fleets
that are ahead of the curve on tires treat them as investments.
Thirty years ago, when your $150 tire wore out at 40,000 miles, you just disposed of it and bought
another one, he says. With tires at $350 or $400 and even up to $700 for wide-single tires, you
have to treat them as assets.The tread has wearability value, and the casing can be retreaded or
sold.
The more retreads you get from a casing,the better the value, Armstrong says. It's conceivable
today to run a tire/casing out to a million miles with excellent maintenance and several retreads.
The key factor in maintaining the value in your tire and casing investment is proper maintenance and
management-and maintaining tire inflation pressure.
Improper inflation reduces tire life, says Bob Montgomery, vice president of intelligent
transportation systems for Stemco."Low tire pressure also leads directly to irregular wear and
premature failures, which the Technology & Maintenance Council of the American Trucking
Associations says are 90% attributable to under-inflation.
Automatic tire inflation systems, such as Aeris from Stemco, can keep tires at their optimum
pressures while providing real-time data to detect leaks, analyze tire performance, calculate fuel
economy and even identify mismatched dual tires.
On the pressure monitoring side, several available technologies can alert drivers or fleet
management of an impending tire failure through telematics.
Continental's ContiPressureCheck, for example, also uses temperature compensation to tell if a hot
tire is underinflated. Without some form of temperature compensation, a hot tire that is underinflated
might appear to be fine, because the contained air pressure is at or above its cold inflation pressure.
Aeris, PressureCheck and similar inexpensive and reliable technologies really can extend tire life.
Perhaps not to 1 million miles every time, but considerably further than if you do nothing buy kick
them a couple of times a week.

The raw material costs for tire manufacturing has increased consistently over the past decade,
raising prices for the logistics industry, according to Heavy Duty Trucking magazine. Natural rubber
costs have risen about $150 per pound since 2004. The trucking industry has found ways to adapt to
rises in raw material costs.
"In a normal year, raw materials make up about 50 percent of the cost of the commercial tire," Rick
Phillips, director of commercial sales at Yokohama Tire Corporation, told the source. "That includes
natural rubber, synthetic rubber, carbon black, steel and a host of other organic chemicals, including
petroleum."
Crude oil costs have also increased significantly in the past decade. The rise in prices impacted truck
tire manufacturers in two ways: as a raw material in tire production and in shipping costs, especially
when tires were coming from overseas, the magazine said.
Despite elevated raw material costs for critical components of tires, the trucking industry has
responded by making more efficient tires with a longer lifecycle. Though the acquisition price has
increased, cost per mile has decreased. In addition to well-built tires, some trucking companies have
responded to rising costs by outfitting trucks withautomatic tire-inflation systems, Fleet Owner stated.
This can reduce operating costs for logistics firms by cutting back on tire wear because low inflation
can cause uneven wear.
Though there is no shortage of natural rubber sources, the cost has risen steeply enough to become
prohibitive, and some companies are investigating rubber alternatives, according to Heavy Duty
Trucking magazine. Natural rubbers come primarily from Asia and West Africa, areas at risk for
seasonal monsoons, which can cause fluctuations in supply. Some tire manufacturers are researching
alternatives to tropical rubber, such as tree species that can grow in arid climates in the U.S.

A major concern of all tyre and rubber manufacturers has always been the worldwide shortage and
spiralling prices of natural rubber (NR). Natural rubber is a highly valuable biomaterial in contrast with
other bio-polymers and it cannot be replaced by other synthetic materials for many vital applications like
heavy-duty truck/bus and aircraft tyres as well as many latex products. As such, it is the first choice for
heavy-duty radial truck tyre manufacturers, especially because of its physical, mechanical properties and
excellent adhesion to steel cord.
Why is NR in short supply? Mainly it is due to production cut and shifting towards palm oil cultivation in
major NR producing countries like Malaysia, growing usage of NR in commercial vehicle radial tyre and
growing demand in the fast-developing economies like China and India. NR is also vulnerable to the
effects of climate change, population growth, and economic developments. In fact, these unpredictable
factors induce major changes in the available yield and demand for NR.
Rubber has become an essential part of our life and it is highly vulnerable to the market conditions. This
gives rise to the fluctuations in the market and leads to a steep increase in price. There are a lot of factors
responsible for it. As with all agricultural commodities, the effects of climate change, pollution, economic
development, and population growth are unpredictable factors, which are also inducing major changes in
available acreage, yield, and demand for natural rubber.

Unless alternatives are identified and developed on a commercial scale, tyre and rubber companies
would experience great difficulties in the days to come. This is exactly why the scientist/technologist
community and other stakeholders across the globe are currently making all-out efforts in this direction.

Shift towards palm oil

The shift towards palm oil in some of the Southeast Asian countries had its tell-tale effects on NR supply.
It was about two decades ago, palm oil emerged as the cheapest source of edible oil and has been
garnering a lot of attention since then. Today, it is the largest produced, consumed and traded edible oil in
the global markets. Not only is it competitively priced compared with other major oilseeds, but it also has
the highest yield. The palm oil tree yields an annual average of 3.7 tonnes of oil per hectare, which is
much higher compared with the rapeseed (0.6 tonne) and soybean (0.45 tonne). Indonesia and Malaysia
are the largest producers and exporters of palm oil, and together have an overall 87% share in the global
output and 90% share in exports.
According to an analysis by Koh and Wilcove during the period 19902005, close to 60% of the palm oil
expansion in Malaysia was at the expense of forest conversion and the rest coming from rubber and
cacao crop land. Such developments are taking place in Thailand and Indonesia too.

Growing NR usage in radial tyre

Radialization has of course increased the percentage usage of natural rubber owing to better green
strength and steel cord-rubber bonding properties. A high level of building tack between the various layers
of liner/carcass/tread/sidewall is essential for the modern days high-speed tyre building machines. Allsteel radials required a higher level of green tack and green strength than conventional tyres. In these
respects, natural rubber is superior compared to the other polymers used for making tyres.
It may be noted that more NR is used in tyres than ever before and the worldwide trend toward radial
tyres is certain to ensure continued demand. These include its excellent dynamic properties, with a low
hysteresis loss, and good low temperature properties, it can be bonded well to metal parts, it has high
resistance to tear and abrasion and it is relatively easy to process. These are some of the distinct
advantages that NR have over SR.

Surging demand in China and India

Today, China and India are the largest consumers of NR and the former, despite being the largest NR
consumer in the world, has inherent problems in extending its limited rubber plantations. For example, the
rubber planting areas in China are located in remote mountain areas or undeveloped areas.
Threat of extreme weather is more frequent than ever. Environment conditions in new expanded area are
poor for rubber tree growth, where rubber trees take longer time to mature. The gap between local output
and demand has to be met by imports. India is also gearing up and due to an increase in presence of
international players in India, there is a surge in the demand for NR and is reflected in the ranking of India
at the third place in the world for consumption of NR. The hunt for alternatives Necessity of course is the
mother of invention. In other words, crisis is the criteria for new developments. About 40% of the worlds
NR production is consumed by USA and Japan. The last decade saw huge ups and downs in NR prices
leading to a renewed interest in developing alternative crops for natural rubber production. There are as
many as 1,800 species identified that could produce natural rubber latex, but only a few of these are

known to produce large amounts of high molecular weight rubber. The hunt for alternatives to NR has a
long history. During World War I & II, the Britons and later on Japan controlled most of the rubber
supplies. During and after that war, a lot of people in different countries started to feel uneasy in that not
only their military strength, but their industrial and economic strengths were dependent on the foreign
rubber.

Guayule and other plants

Guayule, a desert shrub growing in semi-arid regions in Mexico and Southern US, is one of the nontropical plants that has been at the centre-stage of all experiments to develop a commercial alternative
source of NR. Other promising plants are the Russian Dandelion, Sunflower or Lettuce. USA and Canada
are actively considering the latter. Scientists are also considering the synthesis of synthetic poly-isoprene
through bio-isoprene route. Guayule & the Russian Dandelion are two varieties of shrubs which contain
considerable amount of latex. Guayule project was first started in 1988 and the Russian Dandelion project
was started in 1942, for two years until 1944. Based on several studies, TKS (the most popular variety of
the Dandelion) was demonstrated to be a viable alternate source of natural rubber, compatible with
associated rubber manufacturing process, comparable to Hevea, and superior to Guayule. Several other
plants that are able to grow in temperate climates were tested for rubber production, especially in times
when price or accessibility of natural rubber was an issue (1920s, WWII, 1970s). A recent study showed
that lettuce contains small amounts of rubber with a molecular weight similar to that of the rubber tree and
guayule. This provides a new opportunity to study rubber biosynthesis in plants on a molecular level;
however, its potential as an alternate source of natural rubber is unclear. There are other plants known to
produce rubber, like Cryptostegia 2-4%, Milkweed 4-5%, Pingue 1-2% & Rabbitbrush 1-2%.

Synthetic alternatives
Synthetic polyisoprene which has the structure and properties of NR has been an important elastomer,
ever since it was first prepared in 1954 with the then newly discovered Ziegler catalyst. Although it still
demonstrates lower green strength, slower cure rates, lower hot tear, and lower aged properties than its
natural counterpart, synthetic polyisoprene exceeds the natural types in consistency of product, cure rate,
processing, and purity. In addition, it is superior in mixing, extrusion, moulding, and calendering
processes. Isoprene is found in products ranging from surgical gloves to car tyres. Efforts to produce
synthetic isoprene from bio-resources commenced in the backdrop of depletion of global petroleum
resources and environmental hazards.
The production of isoprene from renewable resources (BioIsoprene) is the target of a joint venture
between the Goodyear Tire and Rubber Company and the biotechnology company Genencor. Using
BioIsoprene from Genencor, Goodyear has produced a synthetic rubber for incorporation in a concept
tyre demonstrating the equivalence of BioIsoprene with petroleum-derived isoprene. Recently, Amyris
has signed a deal with Michelin to collaborate in the development and commercialization of Amyris No
Compromise renewable isoprene. Amyris is also collaborating with Kuraray & Kuraray in a venture to
use Biofene to replace petroleum-derived feedstock such as butadiene and isoprene in the production of
specified classes of high-performing polymers. The hunt is on Natural rubber crisis, which surfaced in a
major way for the first time in the aftermath of the Pearl Harbor bombing in 1941, is still lingering
irrespective of development of synthetic alternatives. It was during World War II, rubber industry saw the
kick-start of research on the alternative rubber plants to decrease the dependability on the hevea tree.
Then came the time when extensive exploration of alternative methods to synthesize synthetic rubber
from bio-resources instead of petroleum-based resources commenced. Yes, the hunt is on again. Lets

keep our fingers crossed to see whether the joint effort of scientists and technologists will result in
harnessing these alternatives commercially.

China Tire & Rubber Industry Trends Outlook

Posted Date : February 10, 2014In Tire Market & Tire Company News0

Looking back on 2013, Chinese tire rubber industry has made considerable progress, look
to 2014, China will usher in what the tire and rubber industry development and
changes? Development trends of the new year for the domestic tire rubber industry, we
made the following forecasts and outlook.
Outlook 1: Eucommia, dandelion welcome breakthrough in the application or
2013 release of Green Paper Eucommia industry, noted that the introduction of new
cultivation techniques, gutta latex yield up to 400-600 kg per hectare. If the planting area will
be expanded to 300 gutta million hectares, annual production up to 1.2 million tons of
rubber gutta above. In addition, early in 2011, the National Development and Reform
Commission
had
formally
cultivate
the
gutta
rubber
industry
into the
national strategicemerging industry system.
It is understood that the government and businesses around the country are actively
responding to the policy, gutta rubber-related projects are vigorously advancing.
In addition, the dandelion has entered a new development stage. Studies show that the use
of dandelion roots produce high quality natural rubber has become possible in the
laboratory. The German horse brand in collaboration with the Fraunhofer Institute for
Molecular Biology and the Institute of Applied Ecology, dandelion as a raw material for
industrial production of rubber tires, its research and development projects to be a
breakthrough.German horse brand is also expected in the next few years, the tire rubber
composition containing dandelion will begin testing on public roads.
We found that the industry for future applications and dandelion gutta very hopeful. They
believe that the current two plants have become the most likely alternative to rubber for tire
production of raw materials, as the technology matures, these two resources can effectively
alleviate the reliance on non-rubber producing countries to rubber imports.
Prospect 2: go abroad enterprises have an increasing trend
For the domestic tire and rubber industry, two out universal status quo, to the second
choice, Triangle, Linglong, race wheels and rubber, Hainan represented companies have to
go abroad, set up factories in foreign countries, trying to solve some of the countries on

China tire double reverse as well as the small size of the domestic rubber plantation,
adversely affect the survival and development of enterprises brought.
A website tire industry analyst said that with the United States, Brazil and other regions of
China Tire dual policy continues to heat up, the strength of the domestic enterprises will be
more and more foreign investment. Currently, most of these companies choose to invest in
rubber from Southeast Asian countries closer to the origin. It is reported that this region as
the largest production base of raw rubber, has a unique geographical and price advantage,
Chinese tire industry is increasingly becoming a strategic shift in the target areas.
Prospect 3: excess production of natural rubber will expand the scale
The Rubber Economist Ltd.s An e-mail report, due to the production growth is greater than
the consumption of rubber, natural rubber worldwide in 2014 will show a tendency to
expand the size of the surplus, or climbed from 2013s 336,000 tons to 366,000 tons.
The report shows that the global rubber production in the new year will climb 3.3 percent to
11.965 million tons, 3% higher than previously expected. Increase in Vietnamand Myanmar,
Cambodia and other countries miscarriage rubber production, increased its 2014 annual
expectations.
A rubber futures analysts forecast, due to the oversupply of rubber in the international
situation is difficult to alleviate the short term, in 2014, Chinas rubber prices may continue
to show a steady downward trend.
Looking 4: Spot rubber prices trading platform or promote a more rational
Natural rubber prices in recent years has been in a phase of irrational fluctuations, have an
impact on the healthy development of the domestic rubber industry. In 2013, the
establishment of Chinas natural rubber trading center spot, only to break the pattern of the
futures market price guide, to form a futures market, the spot market and the real flow of the
market interaction and mutual influence of multi-level market system.
Many industry insiders commented higher that the Bohai Commodity Exchange Rubber
Valley natural rubber trading center spot for the rubber industry provides an open,
transparent and efficient stock trading platform to promote change in the pattern of natural
rubber price a useful try, the more the market price provides an important reference.
Prospect 5: tire RFID tags or popularity
June 2013, Korea Kumho Tire will become the worlds first RFID tag (also known as
electronic tags) added tire products company; Since then, the French Michelin Group is also
accelerating the promotion of radio frequency identification (ie RFID) pace tires.

Michelin believes that tires with embedded RFID technology is reliable throughout the life of
the tire can improve the state of the tire tracks. It is understood that there are already other
tire manufacturers to join, these companies hope to develop a unified RFID international
standards as soon as possible.
Some industry experts believe that the technology exists the possibility of adoption. In 2014,
there may be more tire companies apply this technology, Chinese enterprises do not rule
out the possibility to join the ranks.

High rubber prices force tyre

manufacturers to go synthetic
High rubber prices force tyre manufacturers to go synthetic
Ajayan
Share

First Published: Sun, Oct 14 2007. 11 53 PM IST

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Acting pricey: Tyre makers say if the price of natural rubber continues to appreciate, companies may have to raise the
use of synthetic rubber to 30%.

Updated: Sun, Oct 14 2007. 11 53 PM IST

Kochi: Rising prices of natural rubber, the basic raw material for making automobile tyres, is
squeezing the margins of tyre manufacturers, forcing them to increasingly look at synthetic rubber as
an alternative.
Natural rubber is currently priced at Rs90.75 a kg, up Rs10.75 from Rs80 a kg in May-June.
The hike in the price of natural rubber could shave off 3-5% profits of the tyre companies, said Onkar
S. Kanwar, chairman of Apollo Tyres Ltd, a leading tyre maker in India. Kanwar said his company is
exploring the possibility of doubling the use of synthetic rubber.
Natural rubber accounts for about 50% of the production cost of a tyre maker. Other raw materials,
such as rubber chemicals, chord, carbon, etc., are by-products of the petroleum industry and their
prices are linked to oil prices, which are already ruling firm in the international markets.
Acting pricey: Tyre makers say if the price of natural rubber continues to appreciate, companies may have to raise the
use of synthetic rubber to 30%.

Apollo Tyres has an annual consumption of more than 150,000 tonnes of natural rubber. This is
close to 20% of Indias annual natural rubber production of 850,000 tonnes.
D. Ravindran, director general of Automated Tyre Manufacturers Association (ATMA), the apex body
of tyre companies, said tyre manufacturers have started looking at synthetic rubber as a raw
material.
Last year, the average ratio of natural rubber to synthetic rubber was 79:21. This has now changed
to 74:26, he said.

If natural rubber continues to appreciate, companies may

have to raise the use of synthetic rubber to 30%, some tyre
makers said.
Ultimately, it is the decision of individual companies,
Ravindran said. During April-June of current financial year,
the price of synthetic rubber was on an average Rs6 lower
than natural rubber per kg.
Domestic demand for rubber in April-September was
416,800 tonnes, up 3.2% compared with the same period
last year. ATMA and the trade promotion body Rubber
Board are critical of the rubber futures trading on commodity
exchanges but Kanwar of Apollo Tyres finds nothing wrong
with futures trading, although he admits that there is an element of speculation.
The genuine players can take the advantage, he said, adding that his company was using the
platform actively.
The Rubber Board has asked commodity futures regulator Forward Markets Commission to restrict
the daily volatility in the trade. The board attributes the high volatility in rubber futures trade to
speculators.
According to the board, rubber prices ruled much above the international prices between September
2006 and February when the domestic production peaked.
Normally, after the monsoon, rubber tapping is in full swing, which pushes the production up and
brings down the prices. But the board said prices were manipulated during this period, which
adversely affected natural rubber exports.
According to the latest statistics from the board, natural rubber exports in April-September were
down to 16,215 tonnes against 47,729 tonnes in the year-ago period.
But Kailash Gupta, managing director of Ahmedabad-based National Multi-Commodity Exchange
(NMCE) said ever since the exchange introduced rubber futures in May 2003, the fair and
transparent electronic trading platform has benefited nearly 9,000 clients, including a large number
of small and marginal plantation growers.
The exchange has been an active player in rubber futures. The dominant player is the Mumbaibased Multi-Commodity Exchange.

Defending rubber futures trading on NMCE, Gupta said the exchange has provided an alternative
trading platform to more than a million families of small plantation growers, who were earlier forced
to make distress sale whenever the organized consumers withdrew from the market.
According to him, the domestic price (Rs90.75 a kg) is in sync with the international prices (Rs88.41
at Bangkok).
It is also for the first time that the Indian rubber futures have proved to be a price-setter, rather than
price-taker, he said.
According to him, the domestic market price used to be based on international prices but with the
commencement of the futures trade, the global market has been taking cues from the Indian futures
prices.
The benefit of futures trading far outweighs the earlier administered pricing regime. This is reflected
in the rising volume of rubber trade on exchanges, Gupta said.
The physical delivery of rubber reached 49,520 tonnes at NMCE until the expiry of the September
contract last fortnight.

Tyre & Rubber

In the tyre industry, raw material accounts for nearly 70% of the cost of manufacture. Hence, for this industry, the
efficient use of utilities becomes even more pressing, if they to be competitive.
Fuel used for generating steam is around 40% of the total utility cost. Major area of steam consumption is for rubber
preparation. Curing process consumes almost 70- 75% of total steam. Hence, the potential for making these areas
energy efficient is considerable.

By partnering with tyre companies across the country we have been successful at reducing the avg SFC across the
industry and have also now set ourselves a new benchmark to beat. Forbes Marshall- CII joint studies reveal
differences in fuel consumption per ton of finished tyre within the industry, i.e. Specific Fuel consumption SFC (FO
Kg/Ton Finished Tyre)

We have partnered a wide diversity in Tyre and Rubber plants, Radial/OTR, Solid Rubber, Cycle/Scooter, Rubber
Products, etc. We have also rendered our services for autoclaves.

Case Study
A tyre plant in Maharashtra was able to reduce its Specific Fuel consumption from 284 to 254 kg petcoke/MT tyre
savings 2040 kgs of pet coke each day!
The plant implemented the following recommendations

Recovering condensate & flash steam

Rectification of trap installation, right selection of traps on platen/dome presses

Distribution and utilization of steam at the right pressure

Arresting steam leaks.

Implementation of ash re-burning system.

The prime reasons for difference in SFC across plants were:

1. Efficiency of steam generation

Avg

Direct

efficiency:

67%

Avg Indirect efficiency: 75%

Reasons for gap:

1. Fluctuating

steam

demand

as

number

of

presses

online

varies.

2. Average steam consumption is about 50% of total boiler capacity.

2. Optimized steam distribution and utilization

1. Effective

steam

2. Proper

pressure

trapping

(selection,

temperature

and

sizing

&

dryness

installation)
fraction

improves
of

batch

steam

3. Use of indirect steam over direct steam for hot water generation leads to better SFC.
3. Recovering condensate and flash steam

timings
ensure

and

curing.

lower

SFC.

Reasons for gap

1. In
2. Feedwater

most

plants

flash

temperature

steam

is

varies

not
between

recovered.
40-900C

3. Condensate recovery using electrical pump leads to loss of useful heat as electrical pumps cannot pump
condensate

at

high

temperatures.

4. Condensate recovery by trap pressure leads to back pressure on equipments and thus trap malfunctioning.
Importantly it also impacts product quality.

Tyre industry in no mood to reduce prices

George Joseph

| Kochi

January 19, 2013 Last Updated at 00:29 IST

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the tyre industry is in no mood to reduce prices. During the last one year, companies
had raised tyre prices by 20-25 per cent, citing the sharp increase in natural rubber
prices, which forms 35 per cent of the total production cost. However, over the last six
to seven months, local rubber prices have decreased sharply on account of slow down in
demand and rise in imports. Now, local rubber quotes Rs 25 per kg lower compared to
global prices. Yet, the industry is reluctant to pass on this benefit to its customers.
There is not much scope for a reduction in tyre prices, said Sathish Sharma, head, India
operations, Apollo Tyres. He told Business Standard that though rubber prices had fallen
in recent months, the cost escalation due to the sharp rise in raw material prices in the
last three years could not be set off fully with this fall. The price of RSS-4 grade rubber
had shot up to Rs 221 in January 2011 and Rs 238 in April. On account of that huge rise,
tyre companies had increased prices around six times in 2011-12, by a cumulative 2025 per cent.
Instead of reducing prices, leading tyre companies are opting for other modes to push
sales in the light of a serious slowdown in tyre production and sales this financial year.
The April-December period was bad for the industry as production in the medium and
heavy commercial vehicles segment dropped 22.33 per cent on average, quarter-onquarter. The setback was serious in the case of demand from the original equipment

segment. So, companies started giving discounts of 0.5 to one per cent to dealers in
order to boost sales. It is the dealers choice whether to pass on this benefit to end
customers.
The move clearly indicated that companies were not ready to announce any rate cuts.
Industry sources told Business Standard that companies had already initiated giving
discounts to dealers in the two-wheeler and passenger car segments. And, this might
soon be expanded to the bus/truck tyres, too.
Satish said rupee depreciation during the last 12 months had also badly hurt the
industry, as it caused a sharp increase in the cost of imported inputs, such as synthetic
rubber. The cost of production increased sharply in the last two years, and the industry
suffered due to the economic slowdown and drop in demand. So, the recent fall in
rubber prices alone is not enough for reducing tyre prices, he contended.