Tire companies benefit from falling natural rubber prices

According to the Ministry of Commerce's March 20 news, domestic rubber prices have dropped 5.3% month-on-month from March 11 to 17 this week. However, due to the dual impact of falling natural rubber prices in Southeast Asia and falling prices of chemical raw materials, the cumulative decline in rubber prices during the five-week period reached 8%.

From the data of the past five weeks, although the price of natural rubber and synthetic rubber fell, but the trend is still slightly higher than last November, rubber prices have not yet reached the historical low level in the past one year.

For more than four years, rubber prices have been ups and downs.

From January 2009 to November 2011, the price of natural rubber futures soared. The price soared from 12,000 yuan per ton to nearly 43,000 yuan, and then the price fell sharply. In August 2012, it fell to around 18,000 yuan.

“This round of rubber price cuts began in late February,” said Guo Jin Securities Liu Bo. At that time, the price of natural rubber was initially warmer. The Thai government’s policy was promulgated. After that, the average rubber price in Thailand fell by more than 10% for two days. , Rubber prices around the world have also fallen.

The management of a domestic rubber company, who declined to be named, stated that in early April this year, some government officials will meet to discuss the policy and it is hoped that the policy of limiting production and production will be started again.

The CEO of LANXESS Group Greater China Qian Mingcheng told this reporter that last year sales of LANXESS increased by 4.4% year-on-year to 1.035 billion euros; however, sales of butadiene rubber, butyl rubber and industrial rubber products are still Falling. “We are now observing the trend of rubber prices. Some factories have stopped production for rectification. But we still have some non-rubber raw materials such as EPDM rubber that sells very well. The diversification of our business has stabilized the decline in rubber prices. "The negative impact." He predicted that rubber prices will still increase in the second half.

Hongyuan Securities analyst Chai Haohu said that once the rubber price drops, the most obvious beneficiary is the tire industry. On the one hand, it is because rubber prices account for 60% of the overall cost of tires. In addition, quotes for rubber are updated quickly. Tire quotations are reported for half a month or one month.

"If this year's natural rubber prices remain at 25,000 yuan / ton, compared with the average price of 26,800 yuan last year, compared to the same period will be reduced by 6.7%. Rubber accounts for 60% of tire costs, assuming that the tire's gross profit margin is 15% unchanged , then 25,000 yuan / ton of natural rubber prices, will make the tire industry's sales net profit rate increased by about 2.6%." Liu Bo said.

Liu Jun, an analyst at Essence Securities, said that whether the tire company's annual profit will be greatly improved, need to pay attention to the decline in the price of rubber and tires, the automotive industry demand and overseas policy and other three factors.

“In 2012, the demand for the automotive market was sluggish. The average price of main varieties such as radial passenger car and light truck biased tires was 265 yuan/set and 700 yuan/set, a decrease of 5.7% and 12.5% ​​compared to 2011. However, compared to The decrease in natural rubber is even greater, such as natural rubber SCR10 decreasing by 26%, styrene butadiene rubber falling by 23.8%, and butadiene rubber (first grade) quotations falling by 24.4%, resulting in an increase in the profit margin of tires. The profits realized in the year increased by nearly 44% year-on-year. If this trend continues this year, the profits of tire companies may still rise.” said Jun Liu, an analyst at Anxin Securities.