As the effect of tsunami have hit Japan hard. The auto sector is totally hit hence there have been drastic fall in rubber prices.

I wanted to know how will it tyre making companies like Apollo tyres and also on ancillaries and car manufacturers

The impact will be more positive for tyre companies as rubber is the biggest input for them.

The effect for auto ancillaries and car manufacturers will be minor as rubber isn't that big an input for them.

The quake may not affect rubber prices in the long-term.

Rubber Slides to Four-Month Low as Demand May Slow Down After Earthquake - Bloomberg

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What are the companies do you see would get affected?

I hold "gujarat reclaim & rubber products ltd" and I think it would get affected in the short-term.

If I get a lower price then I would buy "gujarat reclaim & rubber products ltd".

It is a short-term positive for all tyre companies, but I won't buy any of them solely based on this development.

The supply for natural rubber remains tight. As mentioned in earlier post, Japan accounts for only 7% of world demand. The sharp correction in rubber is more because of unwinding of speculative long positions in rubber and less because of fears of demand slowdown.

Rubber prices may correct a bit more too, but I don't think the prices will collapse.

I think it is best to ignore this fall in rubber prices. Take a decision only after the prices stabilize.

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