TYRE maker Bridgestone Corp slashes down its use of rubber by 2.6% this year though December as demand in the US will be slower than forecast, according to a Nomura Holdings Inc. analyst.
Bridgestone earlier projected that its consumption of rubber will be 1.93 million tonnes for tyre production globally this year, up 9.7% from last year. An equity analyst forecast that consumption of natural and synthetic rubber may be 50,000 metric tonnes lower than what Bridgestone had projected.
Report said slower demand from tyre makers could speed up the decline in rubber futures on the Tokyo Commodity Exchange, the global benchmark, which entered a bear market this month. The most- active contract retreated 0.2% on April 12 to closed at 276.4 yen a kilogramme (US$2,779/metric tonne).
Meanwhile, US light-vehicle sales in March climbed 3.4% to 1.45 million, the highest monthly total for the industry since August 2007, according to researcher Autodata Corp. Whilst deliveries were strong, they failed to offset weakness in sales of replacement tyres, which account to some 70% of total tyre demand in the market.
The weakened yen against the dollar this year has enabled Japanese tyre makers to lower prices to boost demand, but firms are cautious that the yen’s depreciation will not last.
The currency situation benefits Bridgestone to rake in profits by 62 billion yen this year, whilst declining rubber prices will help the company cut costs by 28 billion yen, analysts said.