Pressure on rubber prices affects us all
February 1st 2008 "The rising price of natural rubber
will present one of the major
challenges that all industrial tyre
manufacturers face in 2008," stated Jean-
Paul Mindermann, Chief Executive Officer of
Watts Tyre Group, at his Q3 Business Review
Conference. The facts are startling; after
2006's wild fluctuations the price of RSS3
has risen sharply and steadily in 2007. In
January 2007 the price per kg was 197 US
cents, twelve months later it sits at 267 with
market analysts predicting that the price will
soon hit 300 cents per kg. Over the last
thirteen months the price has risen by more
than 70%.
This massive rise in price of the key raw
material has been driven by soaring demand
from China and India as their industrial and
automotive sectors continue to develop, and
the shortfall in supply from the main rubber
producing nations in South East Asia.
Combined with high oil prices and an
increased cost of freight the overall effect is
that the cost of manufacture and distribution
of industrial tyres will continue to increase.
Mindermann continued: "Over the past
two years we have absorbed a large part of
these increases and where possible will
continue to do so. However in response to
this latest development we intend to review
retail and dealer prices quarterly in 2008 to
ensure that our pricing is reflective of true
cost. We hope that the price of natural
rubber will stabilise in the coming months
but we must be mindful of the factors that
have caused this increase and recognise that
largely they are not going to go away.
"The task for tyre companies such as ours
is to demonstrate the true value in our total
offering. The rationale for choosing a market
leading supplier such as Watts lies not just in
the quality of the products but also in the
knowledge that lies behind them and the
capability to deliver the right solution for
customers."
He concluded: "There is a false economy
in buying products of a lesser quality, they
may well be cheaper to buy but do not last
as long or perform as well, all of which adds
to the cost. The key measures are total cost
of ownership and downtime, customers will
demand value in the light of price reviews
and we must deliver it." More articles from Watts Industrial Tyres Plc: | 
