Analysts: ‘Massive’ Price Increases Needed to Offset NR Costs

Analysts have warned that tyre manufacturers will have to introduce “massive” price increases to offset the surging natural rubber cost. On 26 May the natural rubber price reached US$3.25/kg, 12 per cent above the level reached last month (US$2.90/kg); and 40 per cent above last year’s average price (US$2.30/kg). According to one Deutsche Bank analyst’s research note the price surge is surprising because natural rubber supply (9.9 million tons in 2007) still exceeds demand (9.7 million tons in 2007); and world inventories represent 23 per cent of annual demand.