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Published: Saturday, 7/16/2011 - Updated: 3 years ago

Global demand, cost of rubber boosting prices of mega-tires

BY SHEENA HARRISON
BLADE BUSINESS WRITER
Prices of natural rubber and synthetic rubber, which is made with petroleum, have increased substantially in the last few years, according to Kevin Rohlwing, senior vice president of training for the Tire Industry Association in Maryland. Prices of natural rubber and synthetic rubber, which is made with petroleum, have increased substantially in the last few years, according to Kevin Rohlwing, senior vice president of training for the Tire Industry Association in Maryland.
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A spike in rubber costs, as well as increasing demand worldwide, is contributing to rising prices for large tires made by Titan Tire Corp. and other tire manufacturers.

Demand for mining tires is "just exploding," according to Titan, which is owned by Titan International Inc. of Quincy, Ill., and operates a large tire manufacturing facility in Bryan. The company began test production in Bryan last year on 63-inch, 13,000-pound mega-tires for the mining industry, which is booming because of high demand worldwide for gold, iron ore, coal, and other minerals.

Prices for tires about 11 feet across, such as those used on Caterpillar Inc. trucks that haul iron ore and coal, have touched $100,000 on the spot market, according to Leighton Holdings Ltd., a contractor for mining companies, including BHP Billiton Ltd. and Anglo American Ltd. That compares with contract prices of about $30,000, according to Roesler Tyre Innovators GmbH, which retreads so-called off-the-road tires.

Kevin Rohlwing, senior vice president of training for the Tire Industry Association in Maryland, said that the prices of natural rubber and synthetic rubber, which is made with petroleum, have increased substantially in the last couple years.

The price of natural rubber, a main ingredient in large tires, was around $2.23 per pound Friday, compared to $1.70 a pound a year ago and 75 cents a pound in 2009.

"You're talking about a tire with hundreds of pounds, if not thousands of pounds, of rubber," Mr. Rohlwing said. "When your main raw material triples in cost, that's going to filter down to the consumer."

The price increases are being seen in other areas of the tire market. Titan Tire announced this month it plans to raise prices up to 8 percent for Goodyear-branded farm tires shipped on or after Aug. 1. Raw material, energy, and transportation costs were cited for the price hike.

International demand also has increased for mining tires around the world. Demand from China, the world's biggest metals buyer, has driven copper, iron ore, gold, and coal to record prices this year, forcing companies to compete for the equipment and labor needed to mine them.

Mr. Rohlwing noted that the majority of industrial-sized tires are made in the United States and Japan, and exported around the world.

"With so many limited numbers of manufacturing plants, and it being such a global product, demand in other parts of the world is going to have a huge effect here in the United States," he said.

Bloomberg News contributed to this report.

Contact Sheena Harrison at: sharrison@theblade.com or 419-724-6103.



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