Natural Rubber Price Falls

The price of natural rubber has fallen by 11 per cent from the peak reached a month ago, say analysts at the Deutsche Bank. However, at US$ 2.5/kg, natural rubber is still up 40 per cent year to date and 50 per cent more expensive than synthetic rubber.

If this decline were to continue in the coming weeks, it will start to have a positive impact on tyre companies’ profit and loss figures early next year, given the lag effect of four to six months. And, say the analysts, since the tyre industry is mostly an aftermarket business, there is a high probability that tyre companies will not pass on this reduction, especially for the first quarters.

Among European companies, Michelin buys approx 1.3bn euros of natural rubber per annum, while Continental has a purchasing bill of 400 million euros.