Writing for the publication, industry commentator James Simms explained that a combination of increased supply from rubber producers and potentially slower economic growth is set to prompt lower prices.

While it may take some time for cost of the raw material to impact the cost of rubber gaskets and other mechanical products, Mr Simms pointed out that firms like MotoGP tyre provider Bridgestone could benefit.

He explained that the company is expecting a 16 per cent year-on-year earnings rise for 2011 and has just re-organised its management team, quipping: "The current management crop at the world's number one tire maker by revenue has been doing quite nicely. A change in drivers though doesn't mean a change of direction. Investors will hope Bridgestone stays focused on the road ahead."

According to Bloomberg, the glut of rubber set to be produced internationally this year will reach levels not seen since 2004. Chief executive of Singapore-based RCMA Commodities Asia Group Chris Pardey told the news provider that prices are linked to both global and Chinese growth.

In his opinion, growth is likely to be slow all over the world, which indicates that the cost of rubber will also suffer.

Author: Paul Smithson

12 January 2012