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