Natural Rubber Prices Continue to Fall

The price of natural rubber fell by five per cent earlier this week, to $1.80/kg. Analysts at the Deutsche Bank say that this brings the price close to the level in January this year ($1.75/kg) and is a 35 per cent drop from the peak price last June of $2.80/kg.

While this is good news for tyre manufacturers, there is a four- to six-month time lag before this will impact on their profit and loss accounts. However, when this does happen, the effect will be significant; taking Michelin as an example, the current spot price will have a positive impact on EBIT of 220 million euros in 2007, compared to a negative impact of 500 million euros in 2006.