Rubber Price Falls Over Debt Crisis Fears

BusinessWeek.com reported on 7 May that the price of rubber fell to its lowest price in more than four months, erasing this year's gains, on concern that Europe's debt crisis may slow the global economic recovery. However, while financial analysts agree that tyre raw material prices have “ticked down for the first time since March 2009,” they say the full year effect in 2010 is still likely to be 15 – 20 per cent higher than last year.

Futures in Tokyo fell as much as 7.2 per cent to the lowest level since Dec. 16, extending declines from the 21-month high of 338.5 yen a kilogram ($3,707 a metric ton) reached on April 16. The contract has dropped 4.4 per cent this year. The market also declined after the yen rose to a two-month high against the dollar, cutting the appeal of yen-based contracts. Rubber for October delivery, the most-active contract, fell as much as 20.1 yen to 259.5 yen per kilogram before trading at 266.2 yen on the Tokyo Commodity Exchange.

Natural rubber accounts for around 31 per cent of tyre manufacturer’s raw material purchasing cost.

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