Thursday, December 9, 2010

Another blow to tyre industry

Crude oil prices, which is currently at $89.08 (3:49 AM EST – 09.12.2010), seems to have upset the calculations of tyre manufacturers. The tyre companies expect an increase in overall costs, as the rising crude oil prices may make synthetic rubber more costlier, which would be another major blow to the industry.

Currently tyre industry is reeling under the impact of a sharp increase in natural rubber prices. Natural rubber prices witnessing a historic hike in the past few months, currently ruling around Rs 197-200 per kg, the price gap between NR and SR has widened, favouring increased substitution. The higher prices of NR had prompted the tyre industry to substitute it with synthetic rubber. The industry has been sourcing its total requirement of SBR through import. An increase in synthetic rubber prices could force the industry to reduce its consumption.

The tyre industry used 1.01 lakh tonnes of SBR and 91,100 tonnes of PBR during 2009-10. The average PBR prices stood at Rs 160 per kg for the quarter ending December 2010. The industry has projected it to go up to Rs 170 per kg by March 2011. The industry expects a similar increase in the SBR prices also. The average price touched Rs 120 per kg in December 2010 and are likely to move up to Rs 130 by March 2011.

Synthetic rubber will continue to hold an attraction till such time the natural rubber prices undergo a strong downward correction.

Read lot more in Rubber4U – 15th December 2010 issue

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