Crisis may affect Asian synthetic rubber

Crisis may affect Asian synthetic rubber

SINGAPORE (Reuters): The financial crisis ripping through Asia is likely to squeeze capital for expansion of the region's synthetic rubber manufacturing firms, commodity firm LMC International Inc said in a report issued on Tuesday.

"Given the recent crash recorded in the Hong Kong stockmarket, it is likely that the Thai, Malaysian and Indonesian chemical majors will find they are not alone in facing financial difficulties," LMC's November rubber report said.

"The spate of currency devaluations in Southeast Asia has put financial pressure on synthetic rubber producers in the region, particularly those currently in the early stages of capital expansion," the report added.

The report, distributed at a rubber conference in Singapore, said the Hong Kong stock market slump would probably affect plans to develop China's synthetic rubber manufacturing industry, at least over the short term.

"Chinese joint venture partners listed on the Hong Kong Stock Exchange may experienced difficulty in raising capital," it added.

However, LMC said any slowdown in the development of China's synthetic rubber manufacturing industry would probably be temporary.

"The medium term prospects for the Chinese market remain promising, with strong projected growth in the automobile industry feeding through to rapid growth in the tire manufacturing sector," it added.

"The major multinational rubber manufacturers are aware of the long-term market potential, and, having exerted considerable effort in establishing joint venture agreements with local manufacturers, will be reluctant to leave their development plans on the back-burner for long."