Rubber and Tires
Rubber and therefore vehicle tires have seen a red-hot rise in prices recently. And it’s not just the increase in price for petroleum-based rubber via more expensive oil. There’s also the relative cooling of the eurozone crisis, which has allowed some vendors in Europe to order more rubber.
Then there’s the seasonality of winter that led to decreased production in the last several months, hurting the supply/demand dynamic. Throw in booming emerging markets and you see what’s skewing rubber higher. According to the Rubber Board of India, for example, India’s rubber production has increased to a record level of 902,000 tons, but its shortfall is likely to exceed 70,725 tons for the 2012. There simply isn’t enough rubber to go around even if oil were cheap — which it decidedly isn’t these days.
Jeff Reeves is the editor of InvestorPlace.com. Write him at email@example.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.
InvestorPlace.com Assistant Editor Adam Patterson contributed to this report.