TOKYO (Bloomberg) – A steep hike in the price of rubber is forcing Bridgestone Corp., the world's largest tiremaker, to cut its consumption by 50 percent over the next decade. Global usage of natural rubber will outstrip supply by 313,000 tons this year, the most since 2006, Goldman Sachs Group Inc. predicted in a November report. The company forecast a price of $4.40 per kilogram next year, more than four times the $1 per kilogram cost in December 2008.
Demand cannot be met as many rubber farmers switch crops and rubber trees age. Bridgestone is currently developing technology that will halve the use of natural and synthetic rubber in each Bridgestone tire without affecting product quality, Masayuki Ishii, general manager at the corporate communications division, said in an interview.
“It's quite reasonable to cut the use of raw materials as they become expensive,” Ishii said in Tokyo on Tuesday. “Our company has the technological ability to realize that.”
Company President Shoshi Arakawa wants to achieve the 50 percent cut in less than 10 years, he added. Natural rubber represented 28.9 percent of tire weight in Japan last year, while its synthetic rival accounted for 21.4 percent, according to the Japan Automobile Tyre Manufacturers Association. Bridgestone's use of natural rubber is larger than the industry average as it produces more heavy-vehicle tires, added public relations manager Kaoru Tomizawa.
Demand in developing markets
Worldwide demand for car tires is expected to expand 20 percent on 2009 figures by 2015, while demand for truck and bus tires will expand by 50 percent according to Bridgestone. Growth in China, the world's biggest auto-market will be much faster, with the company predicting an 80 percent rise in demand, followed by a 50 percent increase in India.
Bridgestone operates 47 tire plants worldwide. The company held a 16.2 percent share in the global tire market in 2009, followed by Michelin with 15.5 percent, according to Tire Business newspaper. In response to rising material costs the company has raised U.S. tire prices for the third time this year.