Scrap tire signs of the times: Weak new tire sales and balder scrap tires
A sluggish economy continues to affect most everyone and everything, including the tire industry. The Rubber Manufacturers Association (RMA) found that new tire shipments for 2012 were stagnant, unchanged from 2011 at approximately 284 million units. The reason – an increase in new vehicle tires was offset by a decrease in replacement tires sales.
However, RMA, which represents U.S. tire manufacturers, sees a slight increase in vehicle miles traveled and anticipated economic growth, which they predict may result in perhaps a 2 percent increase in tire shipments for 2013, or approximately 6 million more units to a total of 290 million units for this year.
At the same time, the RMA said that more than 1 in 8 U.S. vehicles have bald tires, according to a 2012 survey of 5,300 vehicles. It found that more than 13 percent had at least one bald tire, an increase from 10.4 percent recorded in a 2010 survey. Obviously, motorists are postponing buying new tires, a major household budget buster, particularly with higher new tire costs, closely pegged with rising prices of raw materials.
Michael Blumenthal, vice president at RMA is primarily responsible for post-consumer management of scrap tires. He made these observations – “Because of the recession, a lot of people were driving their tires a little bit longer than they would have otherwise. In practice, we probably lost some ground rubber, but we have not seen enough of that to really have any impact on the ground rubber production. There’s still ample ground rubber out there.”
“From 2009 through 2011 it was a real tough marketplace because there were fewer scrap tires out there. Markets were impacted by the recession and a lot of markets lost ground. The impact throughout the industry was quite severe. The one remarkable thing was we did not see a lot of companies going out of business. Companies hunkered down and rode out the storm. What we’ve seen suggests that there is a lot more stability in the scrap tire infrastructure, a lot more than in years past. And now we are seeing that the markets are starting to come back. That’s positive.”
It’s no surprise to anyone that the prices for new tires have been going up over the past few years, primarily due to increased raw material costs to tire manufacturers.
“Even though the prices of new tires have gone up it hasn’t had an impact on the scrap tire market,” Blumenthal continued. “Manufacturers are looking at using different kinds of materials to offset or reduce some of their costs. They are looking for new sources of natural rubber and using non-petroleum materials as their carbon-base to get away from the increased cost of petroleum. They are seeking alternative materials that will give equal or better performance and help stabilize the impact of increasing commodity prices.”
One example of alternative materials was introduced by Yokohama Tires a few years ago when they pioneered the use of oil derived from orange peels to displace some of the petroleum that’s typically used. Last May, Bridgestone, a large tire and rubber company, announced the development of new tire technologies aimed at developing world class tires made from 100 percent sustainable materials. To accomplish this, the company is diversifying the region where it produces natural rubber and expanding the range of reinforced plant fibers it uses in order to replace fossil resources with renewable materials. They are working to develop synthetic rubber, carbon black and rubber compounding agents that can be made from biomass materials.
Marvin Bozarth, president of Bozarth Tire Industry Consultants LLC, is a consultant to the tire industry and the former executive director of the International Tire and Rubber Association. Bozarth gave American Recycler News his views on the current state of the scrap tire market. “Almost all of it has to do with the economy. People can’t afford expensive new tires so they are holding on to them longer and many are buying used tires. There are a lot of people out of work. You go to Los Angeles, Phoenix and places like that where there are a lot of migrant workers and they are buying used tires like crazy. Some people are also driving less because gas prices are getting close to $4 per gallon. But the economy seems to be picking up a little with some growth in housing starts and commercial building. So a 2 percent increase in new tire shipments for 2013 is about as good as we can expect.
“There’s a lot more talk about getting rid of used tires, but that’s not going to happen. Nobody pays you for your used tires. It costs money to get rid of a used tire. I think that’s just ridiculous. Some of the major manufacturers are trying to buy back used tires because of liability risks. Even though it’s a used tire they are still responsible for it. Used tires are not going to go away. In Europe they have cut down on them, but there are still a lot being used.
“When tires are worn down to the core, you let them go.” Bozarth continued. “But a lot of people have 50, 60 and 70 percent of rubber on the tires, and one tire gets punctured, so they put on a new set. That puts three good used tires on the market. People can’t face the reality, but we’re all driving on used tires. You drive around the block and you are driving on used. You might hit a nail or a curb, or whatever in the first 50 miles of the tire and it may be weakened. We want safe used tires. We agree they need to be inspected and have enough tread to make them safe, especially in areas with a lot of rain.”
“Used tire sales have always been strong, but with the drop in the economy and all the people that are unemployed, used tire sales are growing stronger. A good number of used tires are being exported out of the U.S. to other countries. We don’t have control over those, but we do have some control in the U.S. because they are trying to get some state legislation passed that says a tire must have certain qualifications before it can be sold as a used tire.”
“I think you are going to see a good deal more activity in scrap tire recycling. There are now some people breaking down earthmover tires and some are treating crumb rubber. It used to be they could only use about 3 percent of reclaimed rubber mixed in with new rubber, but now we are seeing treated crumb and using up to 20 percent. Scrap tires are also being more accepted as cover for landfills and road building. I think you’ll also see more recycling of tires into fuel,” Bozarth concluded.
American Recycler News spoke with Ron Loyd, vice president of sales and marketing for BAS Recycling, Inc.; located in southern California’s Moreno Valley. Tire recyclers like BAS produce crumb rubber. Tire recyclers also produce products as large as 2” chips which are used as tire derived fuel for high heat generating plants like paper pulp plants and cement kilns.
Loyd said, “There were pressures in the market last year in California for tire collectors. Exports going to the Asian market were up substantially. The majority of tires exported were passenger tires so haulers serving the commercial truck tire markets were less affected. There were many processors that relied quite heavily on tip fees where collections were diverted to exports. That created a really competitive situation in the market for getting those tires. It appears that for a lot of companies in the industry there was a substantial impact, particularly in northern California. Newer companies were popping up and taking the tires for less and then exporting them rather than putting them in the recycling stream.”
Tire recyclers can use ambient or cryogenic processes for size reduction. Generally, tires are size-reduced down to a 1” size via cutting in the ambient reduction process and this material becomes feedstock for a cryogenic process where the material is then frozen and shattered, and finally screened out to finished sizes.
Loyd continued, “In North America there seems to be an excess of crumb rubber material available in the marketplace. Any time you have more supply than demand it creates pricing pressure. That’s something the industry has to deal with. I don’t know how much the economic downturn impacted crumb rubber usage or whether that will change as the economy improves. It has certainly had an impact on the tire recycling industry.”