Nizhnekamskshina Slows Production in January and February

During January and February of 2006 JSC “Nizhnekamskshina” says it produced 100,000 less tyres than planned. According to the company, the basic reason for the disruption was the high rubber price. The beginning of March has not proved to be much better for Russia’s largest domestic tyre producer. In Nizhnekamskshina’s words the situation “remains complex” due to short supplies of natural rubber.

Deutsche Bank analysts noted the development but said: “It is unlikely to have any effect on Nokian or other players but we will need to monitor the situation.” The market watchers do not believe that the shortage is likely to have any direct impact on the other manufacturers (like Nokian) because the different companies use very different compound specifications.

Explaining the timing of the announcement the analysts commented: “We would assume that Nizhnekamskshina simply can’t afford the higher rubber prices [because it] can’t pass on raw material prices…Raw materials make up a larger proportion of the price for Nizhnekamskshina than Nokian or Michelin.