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Softening global rubber prices along with speculation on the street that customs duty on imported rubber would be cut propped up tyre stocks on the stock exchanges on Tuesday.
Rubber prices declined nine per cent in the last one week from Rs 227 a kg to Rs 207 a kg and this would translate into substantial savings for the tyre companies, said experts. “Some hedge funds have been actively selling rubber in the global commodity markets leading to a decline in prices,” said the Head of Research of an Indian brokerage.
Hit by rising domestic rubber prices, tyre manufacturers had made a representation to the Commerce Ministry for a cut in import duty of rubber and the Ministry was looking into the matter.
As news of a possible 20 per cent cut in duty spread during the day, stock prices started moving upwards.
The largest gainer on Tuesday was Ceat which rose 16.39 per cent to close at Rs 110 to a share. Dunlop, JK Tyre, Goodyear, MRF were the other gainers. (see table).
Experts said that decline in crude oil prices also contributed to the decrease in the prices of synthetic rubber as crude is the raw material for synthetic rubber.
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