Tyre companies heave a sigh of relief as rubber prices fall

Tyre manufacturers are heaving a sigh of relief due to the easing of domestic rubber prices of RSS4 category, which had touched its high of Rs 161,000 per tonne in the month of February. Rubber prices have been hovering around their recent lows of Rs 111,000 per tonne in previous quarter, which has helped tyre companies in obtaining operational efficiencies.

Rubber prices have moved up by 17 per cent this year to its high of Rs 161,500 per tonne in mid of February. Since then the prices have come down by 4.5 per cent to Rs 154,000 per tonne as of March 1. The upward trend in domestic prices was mainly on account of rising international prices. World’s largest rubber producing country, Thailand, faced severe floods, which impacted extraction of rubber output, resulting in increasing of prices.

Domestic tyre manufacturers, such as Apollo Tyres, Goodyear Tyres, MRF Ltd., and others faced the heat of demonetisation and rising raw material costs, which impacted the earnings. As also, higher rubber prices led to price hike by tyre manufacturers, wherein the companies raised the prices for truck tyres by 2-3 per cent and for two wheelers by 2-5 percent.

Further fall in rubber prices will definitely enhance the operational efficiencies of tyre companies who have faced the brunt of demonetisation and higher raw material costs simultaneously.