Tyre companies talk hikes as NR prices harden, and rupee weakens

CHENNAI: Tyre companies are lining up more price hikes in the fourth quarter as natural rubber prices start hardening. According to industry experts, NR prices are now inching towards the Rs 205 per kg mark even though it is still much lower than the peak it hit last monsoon.

Shashi Singh, president, All India Rubber Industry Association (AIRIA), said: “Currently, NR prices are at Rs 194 per kg but it is expected to reach Rs 205 soon. That is a slight hardening from the Rs 188 per kg price line ruling in Dec 2024, but the tyre industry made a loss due to high price of NR and non-availability last monsoon when prices hit Rs 245 per kg so these hikes may be linked to that too,” he added.

Big tyre companies have announced that they have already increased prices and more hikes would follow through Q4.

Arnab Banerjee, MD & CEO of Ceat, said: “NR prices have been increasing from the end of Q3 so small increases in tyre prices will happen. The raw material price curve is flattening out, but our margin profile is still not what it should be and if this is the new normal. We have to increase prices to make up the margin.” So there would be small price increases continuing through Q4, he said.

Ceat is not alone. Other big tyre companies like JK and MRF are also talking about the NR price curve. In its earnings call earlier, JK Tyre said that it had already taken to the tune of 1% price hike in Q3 and for the year it has taken a price increase to the tune of about 4%.

Sanjeev Aggarwal, CFO, JK Tyre, said, “Going forward in Q4, we will look at the competitive environment and do the revisioning needed and we expect a 2% to 3% increase in raw material cost going ahead,” he added.

Fellow tyre major MRF also announced in its Q3 statement that “the input cost environment was challenging because of rising commodity prices and higher raw material costs (including natural rubber and crude based raw materials). A stronger dollar also contributed to an overall increase in expenses,” it said.

The dollar strengthening has definitely had an impact given that currently India’s tyre industry has to depend on imports to make up for the shortfall between demand and supply. Said Singh: “There is a 5.5 lakh tonne deficit which is plugged by imports which has now become more expensive partly due to the weakening rupee and partly due to hardening NR prices.” Currently, NR imports attract a 25% customs duty or Rs 30 per kg whichever is higher.