October 22 -- The price of Shanghai rubber futures has exceeded 30,000 yuan per ton, reports Securities Daily.
The cost of rubber accounts for about 50 percent of total tire production costs.
A severe drought in Yunnan and torrential rains in Hainan will cause the top two rubber growing-areas in China to reduce domestic rubber output, while tire demand in China is steadily increasing, according to an unnamed analyst.
According to the data released by the China Association of Automobile Manufacturers,production and sales volume of automobiles increased 36.10 percent and 35.97 percent year-on-year during the first three quarters of 2010 to 13.08 million and 13.14 million units.
In addition, the Ministry of Industry and Information Technology announced a new 'tire industry policy,' which contributed to the rapid rise in rubber prices.
There are six tire companies listed on the stock market, four of which recorded declines in first half net profit. The first half net profit of Giti Tire Corporation (600182) plummeted 81.11 percent year-on-year to 11.68 million yuan.
Qingdao Doublestar (000599) predicts its net profit will drop 50-100 percent during the first three quarters of 2010, as a result of higher rubber prices.
(capitalvue.com)
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