BEIJING (April 9, 2012)—Financial analysts believe the high cost of natural rubber will have a negative impact on China's rubber industry in the future, according to a report by a trade association.
The China Rubber Industries Association report said analysts believe raw material prices can't be easily passed on to customers in China. The study said NR accounts for up to 40 percent of the cost of production of each tire.
The CRIA said China consumes about 3.4 million metric tons of NR annually, yet produces just 720,000 tons itself. As a result, pressure is growing in China to control the price of NR.
China's tire companies increasingly are becoming involved in the rubber trade and are being encouraged to build their own stocks to stabilize prices.
One option is for tire companies to acquire plantation operators in Southeast Asia and to gain control of smallholder output, the report said.