India's natural rubber price drops to 3.5-year low

ERJ staff report (TP)

Mumbai, India − Natural rubber price in India, the world's fourth biggest producer, dropped today to their lowest level in three-and-a-half-years on ample supplies amid sluggish demand, reported Rajendra Jadhav for Reuters.

Lower prices would bring down the raw material cost of tire makers, thereby boosting their profitability, as natural rubber makes up more than 40 percent of the cost of a tire.

The spot price of the most-traded RSS-4 rubber (ribbed, smoked sheet) at the Kottayam market in the top producing Kerala state fell by Rs100 (€1.18) to Rs15,300 (€181.4) per 100 kg on Monday (25 November), the lowest level since 12 May 2010.

"Prices are continuously falling as demand is weak. Tire companies have already built inventory from imports. Their buying is weak," George Valy, president of the Indian Rubber Dealers' Federation told Reuters.

CEAT Ltd, JK Tyre and Industries Ltd, MRF Ltd, Balkrishna Industries Ltd and Apollo Tyres Ltd are likely to benefit from the lower prices.

Share prices of Indian tire makers have been outperforming their international competitors since the past two months in the Thomson Reuters Global Index of the 59 tire and rubber companies.

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Full story from Reuters