- Tire manufacturers have long relied on a stabilizing agent known as carbon black—fluffy, gritty powder produced by combusting natural gas and oils.
- Russia is the country that has been producing this raw material most effectively, and it exports large quantities to other tire manufacturers all over the globe.
- After the Russian invasion and subsequent sanctions, production capacities and locations were suddenly and significantly limited. This created existential crises in some industries.
Trailing the River Volga, a factory combusts and stifles natural gas at 2800°F, smoke pluming around the city of Volgograd. This combustion process produces fluffy patches of natural gas. Black particlesVolgograd factory houses a small number of nanometers. Volgograd, formerly known as Stalingrad was a small Russian city located in the southwest. It is home to one OMSK Carbon Group’sCarbon black factories
These particles, which are produced in almost all world markets, eventually make their way into every tire, making them a compound called Carbon black. Carbon black is used as a filler for inner liners and sidewalls. It has heat dissipation properties and UV protection. Each tire manufacturer uses carbon noir, sourcing it from different plants around the world.
Traditionally, these transactions weren’t notable. These transactions are not unusual. In recent years, however, analysts have raised concerns about a lack of carbon black. Journalists and energy producers Carbon-black shortages were correctly predicted starting in 2018. In India and the USA, carbon-black production problems have hampered domestic tire manufacturing and exported revenues.
Then came the February 2022. Russia invaded Ukraine in a brutal show. Many sanctions were imposed against Russia Federation as a way to reduce resources and weaken the attacker nation. Many tire manufacturers were then suddenly without access to carbon black. Autoweek We spoke to several tire manufacturers. All confirmed rising raw material prices, while some expressed concerns about supply issues.
While some brands may have used Russian carbon black more than others, it is clear that Russian carbon black has been an important ingredient in many of the world’s most successful brands. The cornerstone of the tire industryFor many years. According toData from the World BankRussia was the second largest carbon black exporter in 2018, shipping more than 1.6 billion pounds around the globe (worth $680million). At 414 million pound, the US was the fourth largest US exporter in 2018.
BridgestoneAccording to some reports, the Russian OMSK factories have been using carbon black since 1991. Pirelli has had factories in two Russian cities—Voronezh and Kirov—since the 1940s. Now, some tire manufacturers and carbon-black producers are trying to make up the difference.
Tire manufacturers rarely create their own raw materials, but multiple producers said they try to source them—specifically carbon black—as locally as possible. Continental Tires will face challenges both domestically and internationally, but each facility has its own unique problems. North American factories use US-produced Carbon Black and are facing shortages. EPA regulations. In Europe, Continental facilities continue to struggle with the shortage of raw materials resulting from the conflict in Ukraine.
“As of today, we can continue to produce at our European tire plants,” said Kathryn Blackwell, vice president of communications and marketing at Continental. “However, we are observing that the supply situation for raw materials required for tire production in Europe is further deteriorating in light of the sanctions imposed and the further worsening of logistics bottlenecks.”
Continental is therefore reevaluating its production process on a plant-by-plant basis. Despite production holdups related to environmental regulations and raw-material shortages, Continental says it doesn’t anticipate general availability issues for the time being.
Continental, like many other manufacturers has its factories in Russia and sources raw materials from Russia. Continental has since closed, Reopened its factoryThe move in Kaluga Oblast was a small part of the production for the Germany-based firm.
However, there are some manufacturers that heavily rely on Russian materials or plants. NokianThe famous Finnish tire brand, ‘Finnish Tires’, is suffering a severe hit to its production. According to its first-quarter report, around half of the company’s raw materials were sourced from Russia prior to the implementation of EU tariffs.
“In 2021, Russia represented approximately 20% of Nokian Tyres’ net sales, and approximately 80% of Nokian Tyres passenger-car tires were produced in Russia,” The report is as follows. “Raw material unit costs (EUR/kg) in manufacturing, including inbound logistics cost, increased by 35% year-over-year, containing negative currency impact.”
Nokian began to diversify its manufacturing operations immediately after the February invasion. This included the long-term transfer of production lines from Russia to Finland, and the US. Nokian made clear that the company is not and has never been a supplier to the Russian army.
Nokian will continue to search for new raw materials and create new production facilities. “Nokian Tyres is expediting its plans to invest in new production capacity in Europe, and continues to increase production capacity at its factories in Nokia, Finland, and Dayton (Tennessee) US,” the company said. The company also maintained positive sales figures through March.
Some manufacturers say that world events have not had an impact on their production. A spokesperson for Bridgestone Tires said the company hasn’t experienced any production disruptions.
“We monitor all critical raw materials and global logistics closely and do not foresee any impacts to our supply at this time,” the spokesperson said. “Our team will continue to monitor this situation and maintain open lines of communication with all of our key stakeholders to ensure adequate supply and overall business continuity.”
Bridgestone’s adjusted profits margins increased 19% over the previous quarter. On the company’s Earnings callMasuo Yoshimatsu, the CFO, acknowledged that the company was facing rising raw material costs. He also said that the company expects to deal with limited demand due to slowdowns in automotive manufacturing. Despite this, sales have been strong in North America as well as Europe for the Japanese company.
The heavy lifting that keeps the automobile industry going is done by tire manufacturers. Even before the war in Ukraine, tire sales were negatively affected by the COVID-19 epidemic. Woody Rogers, Vice President of Marketing at TireRack, stated that business has only just started to pick up for the online retailer TireRack.
Manufacturers don’t always disclose the problems they have when tires arrive at their factories. “We can’t do much about it,” Rogers said regarding manufacturer, transportation, and supply constraints. TireRack has no plans to stop trying, despite the numerous challenges. Tires can become fragile as they age, so TireRack will continue to offer as many products as possible. Rogers stated that tires will most likely become worn out before they age, even if you drive regularly.
“Generally, with the timing of supply, things aren’t aging out but actually selling out quickly,” Rogers said. “You aren’t finding aged products on the shelf, at least not from us.” Shipments which used to take five days are now taking two months, but this doesn’t mean those tires are old.
Despite some unexpected turbulence, for now tire production seems stable. Manufacturers are driven to search for new carbon-black suppliers. North American manufacturers rely on an increase in US carbon-black production, while European and Asian producers tap regional repositories.
The market is still volatile. Birla CarbonA major shareholder in the carbon black industry,, announced a 15% price increase for carbon produced in North America effective July 1. According to data from the US Bureau of Labor Statistics, this trend is already in place. After 20 years of relatively stable price increases, the US producer price index for carbon black has more than doubled between April 2020 and now.
First-quarter reports suggest many tire manufacturers managed to post positive sales from year-to-year—a facet of the high-demand and low-supply market plaguing the automotive world. Tire manufacturers may become impatient as they try to figure out how long this market dynamic can last, and face logistical bottlenecks in vehicle production.
Let us know your thoughts about this topic. Global conflict and supply chain issues have affected the tire industry—or whether your own business has been impacted—in the comments below.