Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-21
TIRE PRICE CUTS
THOUGHT UNLIKELY
Reduction Under Stevenson
Plan of Output Probably
viii Hold Values Up.

Special DISPATCH TO The star.

Special Dispatch TO The Star.
NEW YORK. February 21.-The
output Of the East Indian rubber plan
tations, on which America depends
for her crude rubbe' supply, will be
restricted to so per cent of capacity
May j. This will take place as re-
suit of the restriction of exports I'M
der the so-called Stevenson plan. 1t
will not be announced by the British
government until April 30, but rubber
importers, dealers and tire manufac-
turers regard il already as an accom-
plished fact.
The price of rubber today is well
under the pegged price which must
be maintained in each three month
period to avoid 10 per cent additional
restriction. The average is destined
to remain below that price. Produc-
ton today is limited to 20 per cent of
capacity. But the unused permits for
expectation of tonnage. which had
been issued before the imposition of
the 10 per cent restriction February
J.. added to present permitted output,
amount TO practically 100 per cent Of
production capacity for the next two
months.
Six Months Supply.
Today there is In London, in hands
Of dealers in America and afioaf
approximately six months supply %
crude rubber for the entire world
This amounts approximately TO 220,-
600 tons. Consequently consumers
know where they can get their raw
material supplies. They are not
worried as to a possible squeeze and
are buying as and when they need
crude instead of laying in stocks for
future requirements. This tends to
stabilize rubber prices. and only an
unlooked,for upheaval, according to
factors i'm the trade, could raise prices
to such a point as 10 avoid further
10 per cent restriction 10 weeks from
now.
Tire manufacturers have been
caught before more than once by buy
ing high. priced rubber for future
needs. They are naturally shy of buy
ing futures. SO far as is known. there
is no record of any large manufacturer
buying rubber either spot or futures.
on the rubber exchange. They Will
put out hedges to protect themselves
on the fluctuations of cotton for cores
and fabric, but they do not follow a
like policy on rubber in the present
extremely competitive condition of the
tire market.
All this makes it look rosy for the
tire manufacturers. About 22,340 600
vehicles will be in the market for tires.
But they have not everything their
own way. Rubber stocks in London
are large, it is true, but they are in
strong hands. Control has passed
from the spectators to the holders.
These men have money enough to
hold their rubber if necessary. They
say frankly they a going to hold 1t
for q pence, or about 43 cents,
pound. If they hold IF five or six
months, consumption will have licked
up present stocks and they may see
their hopes fulfilled.
Retaining Strides Ahead.
Not so much rubber is needed, on
the other hand as in previous years.
Recla inning of rubber has made long
strides in Two years. The Mexican
guayule rubber is being extensively
used for some purposes. However
manufacturers have found there is a
point in the use of reclaimed rubber
beyond which they cannot go il they
hope to retain their positions as quail
ity manufacturer
The increased demand for replace
ments Indicates that the cheaper
grades of tires sold in the last year
have not stood up" 1t is conserva-
lively estimated that 100000 to TO-
900. 900 castings will be required in 1927
Akron. the backbone of the industry,
is now turning out about $4,000 to
10000 castings a day. That rate
would seem well warranted. although
the situation does not lend itself to
hopes of price reductions for consum-
ers.