Natural Rubber Reaches New Low

After reaching record levels earlier in the year, natural rubber prices have now fallen to more comfortable levels for tyre manufacturers. On Friday 22 September the price of natural rubber dropped to $1.7, almost 40 per cent less than the peak reached three months ago.

“Since spot price has a four to six month lag effect in tyre companies’ profit and loss the natural rubber purchasing bill could be for the first time in 2007 lower than in 2006 (by as much as 20 per cent if price stays at current level),” Deutsche Bank analysts commented, adding: “Michelin is the most sensitive Co to natural rubber price variation. In 2006, their natural rubber purchasing bill (1.4 billion euros) is expected to be equivalent to their EBIT (1.3 billion euros).”