Cost of rubber goods set to rise

Spot rubber improves on short-covering


Kottayam, Nov. 1

The physical rubber prices hit record highs on Monday. The market seemed to be moving in tune with the domestic futures ridden by supply concerns on fresh buying and short-covering.

According to sources, certain tyre manufacturers were buyers on RSS 4 up to Rs 192.50 a kg at Kottayam. Sheet rubber flared up to Rs 193 from Rs 190 a kg in the main marketing centres.

The grade increased to Rs 192 (190) a kg both at Kottayam and Kochi, according to the Rubber Board.

The November series improved to Rs 196.25 (194.45), December to Rs 199.34 (197.39), January to Rs 201.72 (199.64) and February to Rs 203.15 (201.83) a kg for RSS 4 on the NMCE.

RSS 3 slipped at its November futures to ¥316.7 (Rs 175.20) from ¥317.5 during the day session but then remained inactive in the night session on TOCOM. The grade (spot) closed marginally higher at Rs 179.13 (178.96) a kg at Bangkok.

Spot rates were (Rs/kg): RSS-4: 193 (190); RSS-5: 182.50 (180); ungraded: 178.75 (176); ISNR 20: 189 (187) and latex 60 per cent: 125.50 (125).


Cost of rubber goods set to rise


Posted: 01 Nov 2010 04:23 AM PDT
The cost of tyres, gloves and condoms is set to rise following a 65 per cent jump in the price of natural rubber in the past year.

The surge is the result of heavy rains in the main rubber-producing region of south-east Asia, which have disrupted rubber tapping.

The rubber price has tripled in two years, surpassing the record level set in 1952 when fears about the potential spread of the Korean War triggered panic buying.

That is putting pressure on manufacturers to raise prices or face lower margins. Major tyre companies including Bridgestone, Michelin, Goodyear and Continental have raised prices by 5-15 per cent this year – and some businesses have announced a further round of price increases.

Continental is to put prices up by 5 per cent from the start of next year, citing “the currently very high price level for the main types of natural rubber used in the production of car tyres”.

Goodyear last week reported a loss for the third quarter in spite of its highest sales in two years, sending the shares tumbling 12 per cent in two days.

Adam Glickman of Condomania, one of the largest speciality condom retailers in the US, said the price of condoms had risen 10-20 per cent in the past year and manufacturers were warning of further increases.

The branded condom market is dominated by SSL International, the London-based company that owns the Durex brand and is being acquired by Reckitt Benckiser, as well as Church & Dwight of the US and Australian-listed Ansell.

Lim Cheong Guan, executive director of the world’s biggest rubber glove manufacturers, Malaysia’s Top Glove, said it was forced to raise prices “in order for us to sustain our business”.

The benchmark rubber price, ribbed smoked sheet 3 or RSS3, was quoted last week at $4.05 per kg in Bangkok, according to the Rubber Research Institute of Thailand, just short of the all-time high from April of $4.10 per kg.

Analysts expect prices to remain high. While supply has disappointed, demand is rebounding from the lows of the financial crisis.

Global light vehicle sales will rise 10.5 per cent this year, according to consultancy JD Power, while tyremaker Pirelli estimates demand for truck tyres has risen by more than a half in markets such as China so far this year.

Jom Jacob, senior economist at the Association of Natural Rubber Producing Countries, said he expected the tight situation in the rubber market to worsen: “The concerns over natural rubber supply are likely to persist until the end of 2011.”

(ft.com)





Indian tyre makers buy rubber at record $4.33 per kg
Posted: 01 Nov 2010 04:13 AM PDT
MUMBAI: Indian tyre makers on Monday bought natural rubber at a record 192.5 rupees ($4.33) per kg as unseasonal rains tightened a supply squeeze in the world's fourth biggest producer, three dealers said.

Tyre makers bought RSS-4 rubber (ribbed smoked sheet) by paying as much as 19,250 rupees per 100 kg at the Kottayam market in southern state of Kerala, higher than 19,100 rupees they paid last month.

The benchmark rubber November contract on India's National Multi-Commodity Exchange (NMCE) hit a record high of 19,837 rupees per 100 kg earlier in the day. ($1=44.4 rupees)

(economictimes.indiatimes.com)





Goodyear loses $20M in 3Q amid rubber price hikes
Posted: 01 Nov 2010 04:11 AM PDT
CLEVELAND (AP) — Goodyear Tire & Rubber Co., hurt by spiraling rubber expenses, reported a $20 million third–quarter loss Thursday despite solid sales increases.
Shares dropped 9 percent as Goodyear warned that it would face more raw–material pricing issues in the fourth quarter.
The Akron, Ohio–based company, the biggest U.S. tire maker and third largest globally, said the loss amounted to 8 cents per share. In last year's July–September period, Goodyear earned $72 million, or 30 cents per share.
Excluding write–offs and other charges, the company said it would have earned 13 cents a share. Analysts expected a 10–cent a share profit, excluding charges.
Revenue rose 13 percent to $5 billion, and the number of tires sold rose 6 percent.
The bright sales picture was blunted by raw material costs, up $381 million for the quarter. Goodyear said natural rubber costs have skyrocketed threefold since early 2009. About half its rubber supply is natural, and half synthetic.
Goodyear shares closed down $1.05, or 9 percent, at $10.56.
Richard J. Kramer, chairman and CEO, said improving sales pointed to continued industry recovery from the recession.
Kramer said in a conference call with analysts that the company is benefiting from a global economic recovery.
"Our industry, and industry in general, is on an upward tick," he said. "We're seeing evidence of investments in essentially every region of the globe in tire unit volumes, even in truck, are turning back to higher levels at a faster pace than anyone had anticipated."
Sales in Goodyear's key North American market rose 17 percent to $2.2 billion, the highest in two years, with the number of tires sold up 5 percent. New–vehicle tire volume rose 12 percent.
Elsewhere, sales increased 7 percent in Goodyear's Europe–Middle East–Africa region, 17 percent in Latin America and 14 percent in Asia–Pacific.
"As we look to the future we feel good about the direction of the tire industry, and we feel even better about our direction as a company," Kramer said.
Analysts with KeyBanc Capital Markets said investors would view the results negatively, in part because margins were weaker than expected.
In addition, segment profits in North America, Europe–Middle East–Africa and Asia–Pacific fell short of expectations, KeyBanc said in a research note.
For the first nine months of 2010, Goodyear lost $39 million, or 16 cents per share, on sales of $13.8 billion. That compared with a loss of $482 million, or $2 per share, on sales of $11.9 billion in the nine–month 2009 period.

(topnews360.tmcnet.com)