Welcome back to the Mining and Tire news roundup. Some interesting developments have taken place this week, and while I don’t see any game changers, they certainly point to some twists and turns over the next few years.
First up, on Wednesday, the 28th, Goodyear announced their intentions to build and market their first 63″ tires to the Mining and OTR communities. As happy as I am to see Goodyear finally make a 63″ tire, I have to wonder what took them so long. As their press release states, they have been manufacturing a 57″ tire for 20 years. Why have they been so….umm…deliberate in bringing such a product to market? Have they developed a radically new process, compound, or technology for use in this product? Those are questions I am unable to answer. I am sure that details will trickle out, the closer the tire gets to launch.
What effects will the introduction of a Goodyear 63″ have on the current market for these tires? As things currently stand, the demand is for Michelin, Bridgestone, Chinese, Titan…in that order(If you have questions about the last two positions: Mexico, South and Central America are your answers). Goodyear is the last of the Big 3 to bring this tire to market. Bridgestone and Michelin have had ample time to test their tires under the most extreme conditions, during a boom time. They have solidified their brand’s reputations for high quality, and have purchasing agents demanding XDR-B’s and VRDP’s. Will Goodyear be able to garner a substantial portion of the markets, given this environment?
The current mindset throughout the industry (buyers, not necessarily manufacturers) is that there is plenty of room for everyone. However, as we have stated before, and as Titan’s botched rollout proved: just because the tire is available, doesn’t mean that anyone will buy it. I have good reason to believe that Goodyear will avoid a similar mistake. If there are not significant technological improvements (as in tire life), then they will probably rise to, and remain in third place in terms of demand for their product(at least with regards to 63″ tires).
This is all just speculation, for now. At the very least, the new capacity will add some jobs up in Topeka, KS, and give an eventual boost to their bottom line. That is great news, indeed.
Moving on to mining/commodities news. There seems to be an undercurrent brewing in the trading community. Most notably, in the secretive halls of the hedge funds. Very rarely do they give a glimpse of what they are trading, and why, to the outside world. A short while ago(probably two weeks) I ran across a blurb in a British paper about hedge fund managers buying up commodities like gold and silver. This morning, while searching for that article, I found this one instead. Basically, it states that even managers who are not gold and silver lovers are jumping on the bandwagon, and buying these commodities as a hedge against losses.
Now, what does this have to do with the outlook for mining. Well, Paul Tudor Jones (the fellow this article is about, who, incidentally has ~11Bln USD under management, with a profits running at 14.88% this year) states that he sees commodities based economies strengthening over the coming year. More specifically, he sees the Australian dollar becoming much stronger over the next 24 months(along with a diminishing dollar).
My take from all this: Mining companies with operations in Australia will probably take advantage of this strengthening position to buy more equipment, and extract as much as possible while their economy is growing. This is going to be the hot spot for OTR Tire sales growth over the next 2 years(with all due respect to Africa, South, and Central America.)
Last, but not least….THE RECESSION IS OVER…..
Well, technically, I guess. Sorry if you hadn’t heard the magnificent news. It seems that no one in the Congress or White House is willing to run around with a megaphone, announcing it. Unfortunately, the jobs just keep leaving, and nobody knows if they are coming back. I sincerely hope that we see some recovery, but I am not counting on it. For it to be recovering, people have to be spending money. My guess is, they are still paying off their credit card debts, which are hanging about from the glorious year that was 2006. It’s been two years since a great TARP was thrown over the heads of the American people.
Since then, people are worse off, around the globe. It’s going to take more than numbers to signal that a recession is over. It’s going to take a tangible recovery. Something is going to have to come out of left field to make this happen. As of right now, I just don’t see it. Hopefully,we will see a return to a more moderate form of prosperity soon.
Thats all the news for now. Stay tuned for the latest news affecting the tire and mining industries. Until next time(Lord willing), we’ll be…
Signing off…
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