Falling Butadiene Price Might Affect Tyre Pricing

TAIPEI, Taiwan - Leading  tyre makers in Taiwan, including Cheng Shin Rubber Industry Co., Kenda Rubber Industrial Co. and Hwa Fong Rubber Industry Co., are seeing obvious rises in orders in January from the preceding month. According to industry insiders this is due to customers’ move to restock inventories.

A sharp increase of rubber prices earlier 2008 as reported in Bike Europe caused a rise in prices of nearly all tyre manufacturers. However in the fourth quarter of last year, the price for butadiene, vital for making synthetic rubber, dropped 90% to below US$ 400 per metric ton from a high of over US$ 3,000.

Seeing such drops in butadiene prices, tyre manufacturers have cut the procurement of synthetic rubber to clear high-priced inventories. Their customers have also cut orders due to the possibility that local tyre makers may likely trim product prices.

With the price for butadiene expected soon to bottom out, the quotation for synthetic rubber and tyres will return to normal, encouraging buyers to raise their order amounts. Major bicycle makers, including Giant and Merida claim their production lines are fully booked till the end of the second quarter. This strong demand in the demand for bicycles is expected to fuel further growth for bicycle tyre makers as Kenda and Cheng Shin.

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