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Footwear Stocks Surge As Rubber Price Drops

Rubber prices fell 13 percent in the last seven days in China.



A worker applies polish to a finished shoe at a Sam Footwear workshop in Agra, Uttar Pradesh. (Photographer: Udit Kulshrestha/Bloomberg)
A worker applies polish to a finished shoe at a Sam Footwear workshop in Agra, Uttar Pradesh. (Photographer: Udit Kulshrestha/Bloomberg)

Shares of footwear makers have surged as prices of rubber, a key raw material, declined over the last nine days.

Liberty Shoes Ltd. led the rally rising 29 percent, followed by Bata India Ltd. at eight percent, Khadim India Ltd. at five percent and Relaxo Footwears Ltd.’s three percent.

Rubber prices fell by nearly 4.5 percent today on the Shanghai Futures Exchange, extending a seven-day trend in which it lost 13 percent. Tuesday’s decline was also the most since September 2017.

Rubber comprises nearly 12-15 percent of the raw material costs for footwear makers, said Sachin Bobade, analyst at the brokerage Dolat Capital. “We have a positive view on footwear stocks that benefit from low rubber prices.”

Footwear Stocks Surge As Rubber Price Drops