Bridgestone tyre recall seen buoying rubber price

Bridgestone tyre recall seen buoying rubber price

BANGKOK (Reuters): The world's rubber price will get a boost
if Bridgestone's recall of 6.5 million tires forces it to enter
the market to buy rubber for replacements, trade sources in
Thailand said on Thursday.

"There will certainly be higher demand in the world rubber
market if Bridgestone needs to buy more rubber for its tyre
replacements," said a trader at a major trading firm.

Bridgestone's unit Firestone said on Wednesday it would recall
at least 6.5 million tires following a U.S. safety authority
investigation.

"This of course means the world rubber price would go up, but
gradually....not sharply and excitedly," said an official at one
of Thailand's largest exporting firms.

Bridgestone is a major buyer of rubber from Thailand,
Indonesia and Malaysia. The three countries account for almost 80
percent of the world's rubber production.

Most traders said Bridgestone would have a good purchasing
strategy that would not allow the world rubber price to rise too
quickly.

"They will definitely not purchase the whole lot at one go,
but will do it bit by bit," said a trader based in Hat Yai town.

Also, Bridgestone had already built up some stocks which they
could use, traders said.

"As a result, they would not be in a hurry to come into the
market to buy additional quantities, even if it is necessary to
do so," said a Thai exporter who is a supplier of Bridgestone.

For its tyre manufacturing, Bridgestone buys Thai RSS quality
as well as SIR grade from Indonesia, traders said.

Bridgestone per annum consumes around 200,000 tons of RSS
grade from Thailand, they added.

Most traders said it was difficult to precisely tell how much
natural rubber was used in Firestone's Radial ATX, ATX II and
Wilderness AT tires, which are being recalled.

But they estimated that Bridgestone would need to buy up to
20,000-30,000 tons of natural rubber.

On Thursday, the synthetic rubber price was quoted at around
$800 per ton on a FOB basis for nearby shipment, while Thai RSS3
was quoted on Thursday at $690 per ton, traders said.

Officials at Bridgestone contacted by Reuters declined to
reveal the component details of the tires.

"Generally, tyre makers use a ratio of 30:70 between natural
rubber and synthetic rubber to produce one tyre," said an
official at Thai Rubber Research Institution.

Used tires can be recycled, but not for re-use in cars,
manufacturers said.

"The reclaimed tires can only be used....as a mattress for
example, but definitely can not be used for a running car again,"
a tyre expert at Bridgestone told Reuters.

Bridgestone runs two plants in Thailand, in Rangsit on
Bangkok's outskirts, and in Saraburi province.