European PCLT tire imports are now above pre-pandemic levels
Serbia has replaced Russia as the fourth largest source of PCLT tire imports, with volumes forecast to increase further with the recent opening of two new plants.
Disruption to PCLT tire production in Europe from gas rationing would result in greater reliance on imports.
Since March, European* cumulative PCLT tire imports have, for the first time, recovered to run above pre-pandemic levels. This is despite the well-documented impact of sharply higher ocean freight costs in this period, and disruption to production in some source countries.
A newly published report by Astutus Research, “European PCLT Tire Demand and Supply Forecasts to 2026”, shows that in the first seven months of 2022, European (EU-27 plus UK) imports from outside the region were 11% higher than the same period last year and 5% higher than the equivalent pre-Covid period in 2019.
Russia was the fourth most important source of European (EU-27+UK) PCLT tires in 2021, representing over 11 million units (7.5%), with a further 1 million units coming from Ukraine and Belarus. In the first half of 2022, Russian tires accounted for over 6.3% of imports, over 5 million tires. The EU banned tire shipments from Russia effective July 10th. Stock-building ahead of this deadline resulted in Russia accounting for almost 10% of imports in June.
Despite the actions of several multinational tire companies to stop or limit production in Russia following the invasion of Ukraine, PCLT tire production in the country was down just 8% in the first half of 2022. However, in July and August output fell by almost 40%. Excluded from its key export market, and with lower domestic demand, Astutus forecasts that tire production is expected to remain depressed for the remainder of 2022 and through 2023.
Serbia replaced Russia as the fourth largest source of PCLT tire imports in 2022, accounting for 6.5% of supply between January and July. Michelin’s plant in Serbia was previously a significant supplier to Russia and with this trade halted it will be looking to divert output to other markets, potentially including the EU.
Serbian exports to Europe are now set to increase significantly. Goodyear now controls the former Cooper Tire plant in the country, which is undergoing a significant expansion of capacity. Furthermore, Linglong of China and Japan’s Toyo Tire have recently begun production at their new plants in Serbia. For Linglong, this will replace imports from China and Thailand. Toyo tire intends to use the plant to supply Europe, freeing up capacity at its plants in Malaysia and Japan, and also to export tires from the facility to North America.
For PCLT tire manufacturers with plants in Europe, a key risk in the fourth quarter of 2022 and the first quarter of 2023 is the potential for disruption to supplies of energy. In particular, as a result of the cut in supplies from Russia, there is the prospect of rationing gas for industrial users. Such a scenario is more likely if there was a cold snap. Amongst the tire-producing nations, the most at risk are Germany and Italy but other countries could be affected directly or indirectly. And whilst the leading manufacturers target ‘local for local’ supply of PCLT tires, a significant interruption to tire production could necessitate bringing in additional tires from their plants in other regions.
*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.