Due to Raw Material Cost Pressure... Bus and Truck Tire Prices to Increase Next Month

Korea Tire Price Increase 5~10%
Kumho Tire Price Increase 3~7%

[Asia Economy Reporter Kiho Sung] The tire industry is set to raise prices. This is due to increased cost pressures caused by the sharp rise in raw material prices such as rubber and logistics costs.

According to the tire industry on the 27th, Hankook Tire & Technology (Hankook Tire) will increase the prices of bus and truck tires by 5-10% starting next month on the 1st. This is the second price hike this year, following the increase in passenger car tire prices in March.

Kumho Tire will also raise the prices of bus and truck tires by 3-7% starting next month. Imported brands have already increased their prices.

This price increase is interpreted as a result of instability in raw material supply. In the first quarter of this year, Hankook Tire purchased natural rubber at 2,330,590 KRW per ton and synthetic rubber at 2,434,141 KRW per ton, which is about 200,000 KRW higher per ton compared to last year's purchase prices. The cost of tire cord purchases also increased by more than 500,000 KRW per ton compared to last year, and carbon black prices rose by about 400,000 KRW.

Hankook Tire and Kumho Tire are experiencing profitability deterioration due to rising logistics and raw material costs. Hankook Tire's operating profit in the first quarter of this year recorded 126 billion KRW, a 32.2% decrease compared to the same period last year. Kumho Tire avoided a deficit but its operating profit was only 530 million KRW.

Additionally, labor union risks are raising concerns. Hankook Tire's labor and management plan to hold preliminary wage negotiations next month. The union is reportedly demanding an 8.5% increase in base pay. Kumho Tire has also been conducting wage and labor negotiations since last month. The union is demanding a 5% increase in base pay, among other things.

The performance outlook for the second quarter of this year is also not optimistic. According to FnGuide, Hankook Tire's operating profit for the second quarter is expected to decrease by 20% year-on-year to 149.5 billion KRW. Kumho Tire is expected to see an 18.3% decrease to 9.3 billion KRW.