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.