India rubber prices jump to 2-1/2 year high; tyre makers fall

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in India jumped to a two-and-a-half-year high on Thursday on limited supplies and tracking gains in overseas markets due to supply disruptions in top producer , three dealers said.

India rubber prices jump to 2-1/2 year high; tyre makers fall

A worker retreads a used rubber at a workshop on the outskirts of Jammu October 29, 2013. REUTERS/Mukesh Gupta/Files

This price rise would increase the raw material cost of tyre makers, thereby putting pressure on their profitability, as makes up more than 40 percent of the cost of a tyre.

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The spot price of the most-traded -4 rubber (ribbed, smoked sheet) at the market in the top producing southern state of Kerala rose by 200 rupees to 14,500 rupees ($213.24) per 100 kg, the highest since 2014.

“Farmers are delaying selling expecting further rise in prices. The rally in overseas markets is also boosting sentiment,” said George Valy, a dealer based at Kottayam in Kerala.

Benchmark rubber futures rallied to their highest in nearly four years, extending gains into a third session, boosted by supply concerns after flooding hit a major rubber-producing area in Thailand.

Thailand will lose around 10 percent of its rubber output in the 2016-2017 crop year due to flooding, a senior industry official said.

Shares of Indian tyre companies, including Apollo Ltd, & Industries Ltd, CEAT Ltd and Ltd, were trading lower in a firm Mumbai market.

($1 = 67.9999 Indian rupees)

(Reporting by Rajendra Jadhav; Editing by Subhranshu Sahu)

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