Rubber Estimates Suggest Price Decreases on Horizon

Monday 20th April 2009 | 0 Comments


New figures published by the International Rubber Study Group of Singapore suggest that the rubber price rebound of 42 per cent over the past four months is coming to an end. The Group estimates that tyre manufacturers’ sales will see a slump of 6.8 per cent in 2009, in line with the general worldwide decline in the figures of the automotive industries. 67 per cent of global output was used in the manufacture of tyres in 2008, making the industry the biggest consumer of natural rubber. Top exporter Thailand is about to increase its supply following its seasonal drop, with prices at $1,530 per tonne – 18 per cent higher than oil-based alternatives – says Bloomberg. The financial news source quotes Goodyear spokesman Keith Price’s assertion that the company would be able to convert 20 per cent of its rubber consumption to synthetic alternatives “without impacting tyre performance”. The manufacturer is keen to enhance its ability to cut costs through synthetic substitution, a sign – alongside increased supply – that natural rubber costs may be on the verge of a downturn.

Bloomberg spoke to commodity hedge fund manager Michael Coleman, MD of Aisling Analytics and Felix Yeo, trading manager at Marubeni Corporation – Japan’s biggest rubber trader – in Singapore, both of whom suggest that rubber prices could weaken by up to 35 per cent. The website also quotes Bridgestone from 19 February, which said that lower rubber and raw material costs may add 99 billion yen (£692 million) to earnings this year. “I see the price going toward $1,000 or $1,200 a metric tonne by the end of September should the economy fail to grow,” said Yeo. “Major economies have yet to make a significant recovery.” Coleman suggested that rubber may decline toward $1,000 a tonne, citing reduced car sales and delayed tyre replacement as primary reasons for reduced demand.

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Category: Product News