Tire Industry Braces for Price Hikes as Rubber Costs Rise

New Delhi, Feb 14 (KNN) Leading tire manufacturers are preparing to implement price increases in the fourth quarter as natural rubber (NR) prices continue to climb. 

Industry experts predict NR prices will soon reach Rs 205 per kg, up from the current Rs 194 per kg and December 2024's Rs 188 per kg level.

Shashi Singh, president of the All India Rubber Industry Association (AIRIA), notes that while current prices remain below last monsoon's peak of Rs 245 per kg, the upward trend is concerning for manufacturers who previously faced losses due to high prices and supply shortages.

Ceat's MD & CEO Arnab Banerjee confirms that price adjustments are inevitable. "Natural rubber prices have been increasing since the end of Q3, necessitating small increases in tire prices," he explains. 

Banerjee emphasises that while raw material costs are stabilizing, profit margins remain below target levels.

Other major players are following suit. JK Tyre has already implemented a 1 per cent price hike in Q3, with total increases reaching 4 per cent for the year. The company's CFO, Sanjeev Aggarwal, anticipates a 2-3 per cent rise in raw material costs going forward.

MRF's Q3 statement highlights additional challenges, including rising commodity prices and the impact of a stronger dollar on expenses. 

The situation is particularly challenging for India's tire industry, which faces a 5.5 lakh tonne deficit in natural rubber supply, necessitating imports that have become more expensive due to both currency fluctuations and rising global prices.

With import duties set at 25 per cent or Rs 30 per kg (whichever is higher), the industry faces mounting pressure to balance costs while maintaining competitive pricing in the market. These factors collectively point to continued price adjustments throughout the fourth quarter.

(KNN Bureau)