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Natural rubber cost hikes tire prices

The price of natural rubber climbed to 86 cents a pound in mid-February, a rise of 35 percent in the first few weeks of 1980. Increasing in cost faster than any other raw material for tires -- including oil-based feedstocks for synthetic rubber -- the price of natural rubber soared 22 cents in just 31 trading days on the Singapore futures market.

As it did, the cost of making a radial auto tire shot up by more than a dollar.

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When rubber grown in Malaysia goes up a cent, the cost of making a radial tire in the United States goes up 5 cents, according to V. Lawrence Petersen, vice-president of materials management for the Goodyear Tire & Rubber Company, which buys nearly 10 percent of the world's natural rubber.

Prices are rising rapidly despite declining demand and world oversupply. As a result, tire and rubber manufacturers are scrambling to use more man-made synthetic rubber and less natural.

World consumption this year is estimated at 3.9 million metric tons.


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