HSM TIRE COMPANY

OTR TIRE PRICE/MARKET

ANALYSIS

DRIVING FORCES

August 2011
CURRENT “OPEN MARKET”
PRICING TRENDS
PREVIOUS SHORTAGE PRICING TRENDS

Peak Prices
(Dec. 2007- Apr. 2010)

53/80R63 40.00R57
Highest Peak - approx. $275,000 Highest Peak - approx. $185,000

37.00R57 33.00R51
Highest Peak - approx. $145,000 Highest Peak - approx. $70,000

27.00R49
Highest Peak - approx. $38,000
 CURRENT SHORTAGE PRICING TRENDS

GROWTH PATTERNS
(Apr. 2010- Aug. 2011)

In early-mid 2010, with the mining market suffering from the global economic
downturn, many of the prices on the “open/spot” market deflated and reached
their low in April or May of the same year.

During this time period some tire prices dipped below even regular contractual
prices from major manufacturers.

Below we take a look at how “open/spot” market prices have rebounded over
the last 1.5 years and evaluate the percentage growth over this short time
period.

53/80R63 40.00R57
Lowest Peak Avg. (May ‘10) approx. $52,000 Lowest Peak Avg. (May ‘10) approx. $26,000
Highest Peak Avg. (May ‘11) approx. $158,000 Highest Peak Avg. (May ‘11) approx. $94,000
Price Increase: 304% Price Increase: 362%

37.00R57 33.00R51
Lowest Peak Avg. (May ‘10) approx. $23,000 Lowest Peak Avg. (May ‘10) approx. $19,000
Highest Peak Avg. (May ‘11) approx. $78,000 Highest Peak Avg. (May ‘11) approx. $48,000
Price Increase: 339% Price Increase: 253%

27.00R49
Lowest Peak Avg. (May ‘10) approx. $10,000
Highest Peak Avg. (May ‘11) approx. $16,000
Price Increase: 160%
With such rapid growth recorded in the “open/spot” market prices over such a
short period of time, the future of tire prices looks to be a challenging one.

Considering the following driving forces, 2012 can be the year that sees
“open/spot” market prices reach all time highs.

Based on several comparative analysis between mineral prices and truck

shipments during peak times (2008), the mining market overall is showing
signs of picking up where it left off prior to the recession – and this includes
the continued struggle against extremely tight tire supply and inflated prices.
 DRIVING FORCES

- NATURAL RUBBER -

The Association of Natural Rubber Producing Countries (ANRPC) have stated

natural rubber prices are recovering hesitantly on low supply, the weak dollar
and high oil prices.

Figures shown below indicate that the present tightness in Natural Rubber
supply would be continued (with a marked slowdown in supply in 2016) and
the commodity would be in deficit through 2018, even with moderate demand
growth.

Quarter (2011) % Growth in Supply ANRPC

1st 10.5%

2nd 3.3%

3rd 3.4%

Comparatively, supply growth in the 3rd Q of 2010 was at 12.1%, far

exceeding this year’s natural disaster plagued harvests.

The Global Natural Rubber stocks-to- use ratio has plunged to the lowest level
ever as expanding demand for the commodity shrinks inventories in China.

Global inventories are just enough to meet about 1 month’s demand –

compared with supplies for about 6.3 weeks from a year earlier.

China, the largest automobile market, may consume 3.5 million tons of rubber
this year, 6.1 % more than a year ago – further fueling the shortage.

These figures may hinder tire makers further with continued cost increases
and shortage of the raw material to produce finished goods.
NATURAL RUBBER PRICING TRENDS
As a result of the Natural Rubber crisis, manufacturers have had to off-set
costs with regular price increases…

There has been 77 individual price increase announcements

by 18 tire makers this year.

How did this effect the OTR sector…

# of
Manufacturer Locations Sector
Increases

Bridgestone
5 U.S./Canada Truck, OTR, Ag
Americas

Truck/bus and
CMA 2 U.S./Canada
OTR

U.S./Canada/Rest of
Michelin 4 OTR, Ag, ATV
North America

Titan 2 U.S. Farm, OTR, Ag

Yokohama 2 U.S./Canada OTR

Retreading tread
Marangoni 2 Global
stock
 DRIVING FORCES

- Mining Equipment Deliveries -

Over the past decade, the population of large (90mt +) mining trucks has
more than doubled worldwide (measured by payload capacity of units in
operation).

To accomplish this (as well as provide the growing number of replacement

units), major truck manufacturers have delivered more than 17,000 trucks in
the last 10 years.

This number equates to more than the total trucks in operation on Jan. 1st
2001.

Below we take a look at truck shipment projections through 2015. With the
rate of growth in various mining sectors truck manufacturers will be hard at
work to keep the market adequately supplied with the largest earthmovers.

Truck Shipment Projections for 2015 (90 mt +)

Year 2000 2005 2010 2015

# Units Shipped 641 1,815 2,591 3,555

Global Population 14,309 17,339 27,017 37,792

Based on estimates of growth in key mineral sectors and geographic regions,
the cumulative effect is a year-end 2015 global population of nearly 38,000
trucks.

To reach this level of worldwide haulage capacity, while also replacing approx.
5,800 older units…

… mining truck manufacturers will need to ship nearly as many trucks in the
next 5 years as they delivered in the past 10 (representing an increase of
12% against peak 2008 shipments).

MINING EQUIPMENT SALES

90-400 Ton-Haul Trucks

(49” – 63” Tires)
Please contact HSM Tire Company
– an Authorized Yokohama Dealer for details:
Tel: 802-734-8678
Fax: 713-568-2493

Email: tomy@hsmtire.com

*DISCLAIMER: All data included in this report has been compiled by HSM Tire Company
through its normal course of business. HSM does not represent or warrant the data for
any other purpose. All data should be assumed to exclude shipping or duty costs.