Natural Rubber Falls to 2005 Levels

Natural rubber prices have fallen to levels last reached 18 months ago ($1.55/kg). This represents a 45 per cent drop from the peak reached last June and 27 per cent on the average tyre companies were paying in 2006 (approximately $2.15/kg), according to a Deutsche Bank report. As the analysts’ predictions are based on 2007 natural rubber prices of $1.9/kg this could result in improved earnings for tyre companies that spend highly on natural rubber.

For example, according to Deutsche Bank, it would have a positive impact of 1.3 euros on the analysts’ 2007 earnings per share predictions for Michelin. In 2006 Michelin was spending as much as 1.5 billion euros on natural rubber, three times more than Continental AG for example.

The natural rubber price at the time of going to press is still today 35 per cent higher than the level it reached two years ago.