No brakes on tyre price hikes likely for now
natural rubber prices in the international markets are set to rise further as manufacturers have guided for further hikes in the ongoing quarter.
According to them an increase of 2-6% taken since the beginning of FY25 is not commensurate with the increase on account of natural rubber prices. This, in turn, has jacked up raw material prices as percentage to net sales by 6-8%.
Higher input costs coupled with a tepid demand from truck and carmakers dented profitability at all tyre makers in the second quarter over the year-ago period.
International natural rubber prices account for more than a third of raw material cost for tyre companies, and these have been moving up necessitating further price hikes. Prices increased to $2,000 a kg in Q2 from $1600 a kg in Q1 in the international markets and are expected to remain elevated, Kumar Subbiah, chief financial officer, Ceat, told ET.
Almost half the requirement is met through imports from Southeast countries such as Malaysia, Thailand, Philippines and Vietnam. The unseasonal weather conditions (cyclone, heavy rainfall)-a fallout of climate change, also impacted output, ratcheting up the prices, said executives at tyre companies.
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