Speakers see glimpses of recovery in US OTR sector

ERJ staff report (TB)

San Antonio, Texas - The US market for certain earthmover and other OTR tyres should begin to recover by late this year and into early 2010, speakers from Michelin North America Inc. and Yokohama Tire Corp. (YTC) told those attending the Tire Industry Association (TIA) OTR Conference this week in San Antonio.

Both speakers - Debbie Corzine from Michelin and Gary Nash from YTC - agreed the market for OTR tyres last year fell, with their estimates ranging from 8 to 12 percent, depending on which database was cited. Shipments overall this year should be lower again, by perhaps as much as 10 to 12 percent.

Both also agreed that while demand for smaller-sized OTR tyres, 49-inch rim diameter and below, was down substantially, demand for larger sizes, 51 inches and up, continues to outpace supply. This dichotomy has split the market into two distinct segments, one where price dictates sales and the other where supply is still trailing demand.

The two speakers also agreed that the timing of a recovery will depend in large part on the effect of the federal government's stimulus package on construction. Demand for construction-related OTR tyres is way off now because of double-digit drops in housing starts, both residential and commercial, they said.

Corzine, market intelligence manager for Michelin, noted several states have partial funding lined up for transportation infrastructure projects but need federal stimulus dollars to complete them. The hope, she said, is that some of them will green light the projects sooner rather than later once they clarify how much the stimulus package will deliver and when.

Nash, director of OTR sales for YTC, said global demand for larger sizes continues, although servicing this demand requires manufacturers to offer global pricing and direct billing. New capacity for larger OTR tyres being brought on stream by Bridgestone Corp., Eurotire Inc., Goodyear, Michelin, Titan Tire Corp. and Yokohama Rubber Co. Ltd. could bring supply and demand more into balance, however.

Nash also noted that for now coal and gold mining continues at a relatively unchanged pace, based on the current level of pricing for those minerals. Other sectors have experienced measurable contraction due to the cutbacks in construction and vehicle building.

From Tire Business (A Crain publication)