Rubber Prices No Longer a ‘Tailwind’ for Tyre Makers
The fact that natural rubber prices have rebounded 25 per cent to US$2.1/kg for RSS3 in the last month means raw material prices that had been assisting tyre manufacturers are no longer a “tailwind.” The news is forcing analysts such as Deutsche Bank revise their earnings estimates as they had mostly factored in the possibility that that tyre companies would pass a portion of this raw material price benefit onto their vehicle making customers. However, with the current boost in rubber prices behind them the 33 – 50 per cent of the so-called rubber tailwind they may have pencilled to share with the OEMs is not likely to be erased.