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Rubber shortage may lead to tireproduction down

Bloomberg has reported that the supply of natural rubber, which comes from rubber trees mostly grown in Southeast Asia, is about to get harder to find. There are a number of reasons, but the main one is that supply was high recently and, because of COVID-19, rubber producers were not able to plant new rubber trees as they otherwise would have. Since these trees take seven years to mature and leaf disease and flooding have affected the trees that offer the current rubber supply, the supply is dropping. Add to that higher demand from China, which is the largest consumer of natural rubber in the world and is bouncing back from the pandemic before other major industrial countries, and a lack of shipping containers, and you have a situation where the forecasters can see trouble on the horizon. According to Bloomberg, rubber prices hit a four-year high in February.

News reports suggest that domestic tire manufacturing is running as scheduled with a rubber supply that remains solid, for now. Continental told the South Carolina–based Post and Courier that it is not seeing a "widespread shortage" at the moment. "There are natural ebbs and flows with this commodity, but short-term no major shortages," a spokesperson said.

Goodyear gave CNBC a similar statement, saying: "We are not currently experiencing supply limitations on natural rubber. While we experienced tight supply late last year during the industry ramp up, we took proactive measures that ensured Goodyear's rubber supply met our factory needs."

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