Nokian Tyres Intend to Reduce Heavy Tire Production Amidst the Slow Demand

Finland - The European market is witnessing an inclination in demand for electric vehicles leading to better market fluctuations of the feedstock, Styrene Butadiene Rubber (SBR), in the regional market. On the other hand, the demand for heavy tires has declined in the European market, and the same path is followed by the market dynamics of the tire industry in the regional market.

As a result, Nokian Heavy Tyres Ltd. intends to alter its manufacturing over the next few months. The changes are expected to have an impact on the production rate of SBR amidst the retarding demand strength. The official of the major tire manufacturing unit, Nokian, stated in the first week of May that higher production of SBR-based tires is not required currently in the market, and adaptation to the fluctuating market is a necessity for survival. According to Nokian, the factors motivating the shift are both production- and financial-based. Moreover, the European region has witnessed a hurdle in supply in the last two months due to the protest rallies occurring in the region. The tire manufacturers faced slower demand pressuring them to come forwards with a solution in their favor. Nokian did not specify how much production it planned to curtail or when it expected to resume existing production levels.

SBR prices in the European market are moving northwards at a slighter pace as the demand for a tire for commercial and lightweight vehicles is on the rise. Moreover, the demand for electric vehicles has expanded in the domestic market as government policy such as the Fit for 55 packages encourages suppliers and consumers to increase production. According to the policy, fit for 55 refers to the EU's goal of cutting overall greenhouse gas emissions by 55% by 2030. The proposed package tries to align EU legislation with the 2030 target. As a ripple effect, the demand for tires remained on a higher edge. As per ChemAnalyst, the halt in the production of heavy tires by the major player may reduce the product's availability for international buyers, leading to tightness in the supply chain