Tire Market Report 01 2015-1

Table of contents
AVERAGE PRICE ANALYSIS 4

2010 2013 January / Year Peak / Year Low
AVERAGE PRICE ANALYSIS 12

2014 January / June / Present
HISTORICAL PRICE ANALYSIS 20

Semi - Annual Price Fluctuation 2010 - 2014
DRIVING FORCES 32
Haul Truck Deliveries and Tire Price Trends 2010 - 2013
CONCLUSION 48
www.earthmovertiregroup.com
- Average Price Analysis -
2010 2013
January / Year Peak / Year Low
Average Price Analysis 2010 - 2013 www.earthmovertiregroup.com

The following pages provide a snapshot of a period (2010 2013) that reflects growth out of
a down market (2010) and into a healthy position powered by commodity prices and steady
equipment deliveries. This information remains relevant to us now as we find ourselves
experiencing similar market conditions to those in 2010.
This period carries significance as it encompasses the world economys emergence from
the Global Financial Crisis and provides a showcase for how quickly OTR tire prices can react
to changes in the market.
At the beginning of 2010 most tire sizes still recorded prices considered to be low especially
when compared with the levels from the previous shortage. However as the global economy
slowly rebounded so did demand for OTR tires, thus driving prices skyward in 2011 and
2012 (almost doubling the January 2010 averages) .
2012 was the year where prices increased to renewed heights in the post-recession
shortage. This was however followed by a slow yet steady decline into 2013 (and now 2014)
as most companies adopted more conservative approaches to spending and expansion.
By the close of 2013 we saw a Low Average quite similar to that of 2010, completing
a four year cycle of high prices. It is important to note that those declining price levels
continued into 2014.

53/80R63
180 000
160 000
140 000
120 000
100 000 January Average

80 000 Year Peak
Year Low
60 000
40 000
20 000
0
2010 2011 2012 2013

40.00R57
160 000
140 000
120 000
100 000
January Avg
80 000
Year Peak
60 000 Year Low
40 000
20 000
0
2010 2011 2012 2013

37.00R57
100 000
90 000
80 000
70 000
60 000
January Average
50 000
Year Peak
40 000 Year Low
30 000
20 000
10 000
0
2010 2011 2012 2013

33.00R51
60 000
50 000
40 000
January Average
30 000
Year Peak
Year Low
20 000
10 000
0
2010 2011 2012 2013

27.00R49
20 000
18 000
16 000
14 000
12 000
January Average
10 000
Year Peak
8 000 Year Low
6 000
4 000
2 000
0
2010 2011 2012 2013

- Average Price Analysis -
2014
January / June / Present
Average Price Analysis 2014 www.earthmovertiregroup.com

The following section takes a close look at how prices have settled in 2014. In the previous
pages we analyzed how these figures moved over a 4 year period and identified 2012 as the
year that renewed peak level pricing. From that point it has been a slow and steady decline.
2014 has welcomed a new definition of low with regards to open-market prices. Not only
have prices fallen to near-contractual levels (some instances below), there has also been a
high volume of surplus inventory being introduced into the secondary market.
With companies aiming to bolster their cash reserves and lighten inventories, many are
off-loading assets that are not immediately required OTR tires included. This significant
increase in readily available stock, alongside minimal demand, have weighed prices down to
similar levels seen during the Global Financial Crisis in 2007 and 2008.
Although the economy may not be in the same state of chaos that it was then, companies
have focused on conservative approaches to expansion subsequently affecting truck deliveries
which ultimately affect tire demand and pricing (we analyze this dynamic relationship in later
analysis).

70 000 53/80R63
60 000
$57,748
50 000
$49,782
40 000
$43,875 Jan-14
Jun-14
30 000 Nov-14
20 000
10 000

45 000 40.00R57
40 000
$41,150
35 000
$33,808
30 000 $32,973
25 000
Jan-14
Jun-14
20 000
Nov-14
15 000
10 000
5 000

40 000
37.00R57
35 000 $37,988
30 000
25 000
$23,250 Jan-14
20 000 $22,359 Jun-14
Nov-14
15 000
10 000
5 000

25 000 33.00R51
$22,640
20 000
$17,000
15 000 $16,804
Jan-14
Jun-14
Nov-14
10 000
5 000

14 000 27.00R49
12 000
$12,030
10 000
$9,338
8 000 $8,940
Jan-14
Jun-14
6 000 Nov-14
4 000
2 000

- Historical Price Analysis -
Semi-Annual Price Fluctuation
2010 - 2014
Historical Price Analysis - Semi - Annual Price Fluctuation 2010 - 2014 www.earthmovertiregroup.com
The following study is a full Period Analysis between 2010 and 2014. We have elected to
provide semi-annual data to better illustrate the larger trends in place and to highlight how
average prices have fluctuated periodically over the last five years.
Each tire size has two slides depicting its historical price data. The first is a simple chart
presenting Semi-Annual Average Price data from January 2010 to June 2014.
In the second slide we dive deeper into more intricate data analysis to help show how
drastically tire pricing can increase or decrease over a given 6-month period. The numbers
are astonishing as we consider the high level of fluctuation identified in such short periods
of time.
In their largest average price variation, every tire size (except for 27.00R49) experienced
an Increase in average price of well more than 50% in a given 6 month period, while the
Decreases were far less drastic over the same amount of time.
It is common knowledge that prices are driven by demand. However, with fluctuations as
large as these depicted in the following pages, it leads us to believe that there is certainly
another commercial factor controlling the ebb and flow of pricing brokers/middlemen.
Peak Jan 12 Low Jun 14
53/80R63
$142,500 $43,875
160 000
140 000
120 000
100 000
80 000 Average
Price
60 000
40 000
20 000
0
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14
53/80R63 Period Analysis 2010 2014
65% decline in AVG price Peak to Current
Peak Average January 2012 $142,500 Month to Month Stats

2010
Low Average June 2014 $43,875
Most Consecutive Price Increases: 6
Period Average 2010 - 2014 $96,001 Most Consecutive Price Decreases: 4

2011
Current Average November 2014 $49,782
Most Consecutive Price Decreases: 2
Largest Increase over one 6-month period:
2012
$41,452 or 74% Most Consecutive Price Increases: 3
June 2010 ($55,948) to January 2011 ($97,400) Most Consecutive Price Decreases: 7
2013
Largest Decrease over one 6-month period:
$54,952 or 48% 2014
June 2013 ($112,700) to January 2014 ($57,748) Most Consecutive Price Increases: 1
Peak Jun 12 Low Jun 10
40.00R57
$120,750 $28,840
140 000
120 000
100 000
80 000
Average
60 000 Price
40 000
20 000
0
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14
40.00R57 Period Analysis 2010 2014
Peak Average June 2012 $120,750 Month to Month Stats

2010

2011
2012
January 2011 ($54,285) to June 2011 ($91,133) Most Consecutive Price Decreases: 5
2013
$34,090 or 34% 2014
January 2013 ($97,879) to June 2013 ($63,789) Most Consecutive Price Increases: 2
37.00R57
$87,108 $22,840
100 000
90 000
80 000
70 000
60 000
50 000 Average
Price
40 000
30 000
20 000
10 000
0
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14

2010

2011
2012
2013
$23,671 or 29% 2014
Peak Jan 12 Low Jun 14
33.00R51
$46,750 $17,000
50 000
45 000
40 000
35 000
30 000
25 000 Average
Price
20 000
15 000
10 000
5 000
0
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14

2010

2011
2012
2013
$14,500 or 31% 2014
June 2012 ($45,500) to January 2013 ($31,000) Most Consecutive Price Increases: 1
27.00R49
$18,008 $9,338
20 000
18 000
16 000
14 000
12 000
10 000 Average
Price
8 000
6 000
4 000
2 000
0
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14

2010

2011
2012
2013
$2,692 or 22% 2014
DRIVING FORCES
Haul Truck Deliveries and Tire

Price Trends
2010 - 2013
Driving Forces www.earthmovertiregroup.com

In the following analysis we take a multi-dimensional look at the relationship between haul
truck deliveries and tire price behavior.
It is evident that the number of trucks delivered has a large and direct impact on the average
open-market prices of OTR tires. New trucks require First Fitment and Replacement tires
leading to increased pressure on supply.
The periods (2010 2014) Highest Peak Averages all fall within 2012 which also happened
to be the year that recorded the highest number of new truck shipments - 4,750 units
shipped (90t 363t).
All of the largest increases in Average Price took place in the first half of 2011 (except
53/80R63) which most likely reflects the procurement of tires for future trucks being
delivered in 2012.
All of the largest decreases were recorded in 2013 (except 33.00R51) when the truck
deliveries were at their lowest 2,782 units shipped.
This high level of correlation can prepare the industry for tire shortages through increased
awareness of the truck market.

Quick Reference Tire Size by Truck Class
Class Common Tire Size
90t 27.00R49
140t 33.00R51
190t 37.00R57
240t 40.00R57
290t 53/80R63
360t 59/80R63

TRUCK SHIPMENTS BY YEAR (90 TON 363 TON CLASS)
2 500
*3rd/4th quarter 2013 shipments are estimated upon an Average of the previous year
2,168
2 000 1,971
NUMBER OF TRUCKS SHIPPED
1 500
2010
1,309
2011
2012
2013
1 000
929
893
860
805
658 647
605
546
500 429
413
296 319 297

268 253 266
207 221
177
138
77
0
90 Ton 140 Ton 190 Ton 240 Ton 290 Ton 308-363 Ton
TRUCK CLASS

5000
4500
4,750
4000 4,410
3500
3000 2010
2500 2,810 2,782 2011
2012
2000
2013
1500
1000
500
138 207
0
Truck Units Delivered (90t - 363t)

Trucks utilizing 53/80R63
Highest Peak
Avg. Jan 2012
$142,500
350
Largest Largest
Increase in Decrease in
300 Avg. Tire Avg. Tire
Price Price
Jun2010 Jun2013
250 Jan2011 Jan2014
$41,452 $54,952
200 or or
2010
74% 48%
2011
150 2012
2013
100
50
138 207 319 266
0
Total Trucks Shipped

Trucks utilizing 40.00R57
Highest Peak
Avg. Jun 2012
$120,750
1 000
Largest Largest
900 Increase Decrease in
in Avg. Avg. Tire
Tire Price Price
800
Jan2011 Jan2013
Jun2011 Jun2013
700
$36,848 $34,090
600 or or
2010
500 68% 34%
2011
2012
400
2013
300
200
100
605 860 929 647
0

Highest Peak
Avg. Jun 2012
500 $87,108
Largest Largest
in Avg. Avg. Tire
Tire Price Price
400
Jan2011 Jan2013
Jun2011 Jun2013
350
$23,275 $23,671
300 or or
2010
250 53% 29%
2011
2012
200
2013
150
100
50
268 296 429 253
0

Highest Peak
Avg. Jan 2012
$46,750
900
Largest Largest
in Avg. Avg. Tire
Tire Price Price
700 Jan2011 Jun2012
Jun2011 Jan2013
600 $17,117 $14,500
500
or or
2010
62% 31%
2011
400 2012
2013
300
200
100
413 658 805 546
0

Highest Peak
2 500 Avg. Jun 2012
$18,008
Largest Largest
Increase Decrease in
in Avg. Avg. Tire
Tire Price Price
2 000
Jan2011 Jan2014
Jun2011 Jun2014
$3,094 $2,692
1 500 or or
2010
23% 22%
2011
2012
1 000
2013
500
1,309 2,168 1,971 893

0

- Pricing Correlation -
Haul Truck Average Tire

Deliveries Pricing
138

53/80R63
138 207 319 266

NO TRUCK DATA
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14

40.00R57
605 860 929 647

NO TRUCK DATA
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14

37.00R57
268 296 429 253

NO TRUCK DATA
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14

33.00R51
413 658 805 546

NO TRUCK DATA
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14

27.00R49
1,309 2,168 1,971 893

NO TRUCK DATA
1/10 6/10 1/11 6/11 1/12 6/12 1/13 6/13 1/14 6/14

Conclusion
Over the last 10-15 years the tire market has remained a hot topic of conversation. With
astronomical price surges and subsequent crashes, what was once a normal part of the
supply chain has now become a variable slippery slope for many miners.
While busy balancing commodity prices, production, expansion plans, and shareholders
miners have been put to task of also having to navigate an ambiguous secondary/grey market.
Throughout this report we analyze the various pricing trends of OTR tires and how quickly
their value can increase or decrease. It is clear that the general health of the economy
is the primary driver here. If the economy is booming, so are most commodity prices. If
commodity prices are high, there is increased investment into expansion. When expansion
is underway, that means fleets are adding more trucks. When fleets grow more tires are
required to ensure demand is met. When tire demand exceeds tire supply a shortage is
born.
When diving deeper into the mechanics of a shortage it is quite simple to identify the causes
(as outlined above), however it is far more difficult to identify a concrete reason for why
prices are reaching these astronomical levels.
During periods of shortage tires are still bought and sold, albeit from alternate sources
mine surplus, dealer stock, small inventory releases from tire OEMs etc. These tires being
transacted still hold the very same value they did when first purchased (not considering age
etc), however their perceived value grows immensely under the pressure on supply.
Conclusion www.earthmovertiregroup.com
The question at this point is WHY?
Also consider the Driving Forces section where haul truck deliveries are examined against
peak prices and average price increases. An increase in demand for tires is rationally
depicted through the increase in the number of trucks that will be entering the market.
However, average open market prices start to increase about 6-8 months prior to these
truck deliveries as purchasing activity intensifies and opportunity is identified.
There is no coincidence that prices are highest when demand is highest, but the question
that remains is how do prices get from point A to point B? How can the price of a single
53/80R63 increase by $41,452 over just one 6 month period? Furthermore, how can that
same tire decrease in value by $54,952 two and a half years later? Finally, how can that
tire then be sold at, or below, contractual levels in the same market space today?
These price shifts are simply the by-product of a broken market. A market that has been
taken advantage of and used against itself. As noted, all of these tires hold a true value,
however it is the perceived value that ruins the system. This perceived value isnt set by
the end-users actually utilizing the tires they are just the unfortunate parties caught in
the chaos. It is those in-between, the numerous layers of anonymity that impede on fair
market conditions, that create instability.
As prices remain at their lowest levels in years there is currently a sense of quiet over the
OTR tire market. However as we have seen, it does not take long for prices to spring into
action as market conditions change and take shape. Now is the time to reorganize and
learn from the past so that the future is a more predictable one a future where a fair and
reasonable market are maintained with clarity and substance.
Conclusion www.earthmovertiregroup.com
Earthmover Tire Group LLC
Tel: 802-734-8678
Email: tomy@earthmovertiregroup.com
www.earthmoverdirect.com
Follow us on LinkedIN: Earthmover Tire Group
*DISCLAIMER: All data included in this report has been compiled by Earthmover Tire Group through
its normal course of business. ETG does not represent or warrant the data for any other purpose. All
data should be assumed to exclude shipping or duty costs.

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Table of contents

AVERAGE PRICE ANALYSIS 4

AVERAGE PRICE ANALYSIS 12

HISTORICAL PRICE ANALYSIS 20

Average Price Analysis 2010 - 2013 www.earthmovertiregroup.com

Average Price Analysis 2010 - 2013 www.earthmovertiregroup.com

100 000 January Average

Average Price Analysis 2010 - 2013 www.earthmovertiregroup.com

Average Price Analysis 2010 - 2013 www.earthmovertiregroup.com

Average Price Analysis 2010 - 2013 www.earthmovertiregroup.com

Average Price Analysis 2010 - 2013 www.earthmovertiregroup.com

Average Price Analysis 2010 - 2013 www.earthmovertiregroup.com

Average Price Analysis 2014 www.earthmovertiregroup.com

Average Price Analysis 2014 www.earthmovertiregroup.com

Average Price Analysis 2014 www.earthmovertiregroup.com

Average Price Analysis 2014 www.earthmovertiregroup.com

Average Price Analysis 2014 www.earthmovertiregroup.com

Average Price Analysis 2014 www.earthmovertiregroup.com

Average Price Analysis 2014 www.earthmovertiregroup.com

Peak Average January 2012 $142,500 Month to Month Stats

Period Average 2010 - 2014 $96,001 Most Consecutive Price Decreases: 4

Peak Average June 2012 $120,750 Month to Month Stats

Period Average 2010 - 2014 $69,062 Most Consecutive Price Decreases: 4

Peak Average June 2012 $87,108 Month to Month Stats

Period Average 2010 - 2014 $52,398 Most Consecutive Price Decreases: 3

Peak Average June 2012 $46,750 Month to Month Stats

Period Average 2010 - 2014 $30,626 Most Consecutive Price Decreases: 3

Peak Average June 2012 $18,008 Month to Month Stats

Period Average 2010 - 2014 $13,813 Most Consecutive Price Decreases: 3

Haul Truck Deliveries and Tire

Driving Forces www.earthmovertiregroup.com

Driving Forces www.earthmovertiregroup.com

Class Common Tire Size

Driving Forces www.earthmovertiregroup.com

296 319 297

Driving Forces www.earthmovertiregroup.com

Driving Forces www.earthmovertiregroup.com

Driving Forces www.earthmovertiregroup.com

Driving Forces www.earthmovertiregroup.com

Driving Forces www.earthmovertiregroup.com

600 $17,117 $14,500

Driving Forces www.earthmovertiregroup.com

1,309 2,168 1,971 893

Driving Forces www.earthmovertiregroup.com

Haul Truck Average Tire

Driving Forces www.earthmovertiregroup.com

138 207 319 266

Driving Forces www.earthmovertiregroup.com

605 860 929 647

Driving Forces www.earthmovertiregroup.com

268 296 429 253

Driving Forces www.earthmovertiregroup.com

413 658 805 546

Driving Forces www.earthmovertiregroup.com

1,309 2,168 1,971 893

Driving Forces www.earthmovertiregroup.com

Follow us on LinkedIN: Earthmover Tire Group

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