In Short:
Tyre makers are planning to increase prices by 2 to 5 per cent due to rising raw material costs, including natural rubber. Firms like CEAT and JK Tyre are facing challenges as the prices of natural rubber continue to rise due to factors like freight and imports. They hope for future price corrections and reduction in raw material costs in the coming months.
Tyre Makers Prepare for Price Hike
As raw material prices continue to rise and domestic natural rubber sees an increase in price, tyre makers are gearing up to raise prices on their products.
Price Increase Expected
The anticipated increase in tyre prices is projected to be between 2 to 5 per cent on select tyre models.
According to businessline, Kumar Subbiah, CFO of CEAT Ltd, stated, “We are expecting the raw material prices to rise by 5 to 6 per cent in the upcoming quarter compared to quarter 1. The surge in natural rubber prices is a result of increased freight and imports. Availability concerns have arisen due to significant transit time delays in imports, leading to local natural rubber prices being sold at a premium to international prices.”
In Q1 FY25, companies had previously implemented price increases in select categories. CEAT witnessed a price hike of 1 to 2 per cent in specific categories, as confirmed by Subbiah. He mentioned that the earlier increases did not fully cover the heightened costs, hinting at the possibility of more price hikes in the future.
President (India) of JK Tyre & Industries, Anuj Kathuria, expressed, “We could manage earlier due to inventories, but we are feeling the impact this quarter. Depending on global demand and weather conditions, as well as the production of natural rubber, prices may fluctuate. We also need to monitor crude prices. If raw material costs escalate further, we will have to consider additional price hikes.”
Mitigating the Impact
Subbiah added, “Currently, raw material costs are at a peak, with freight playing a significant role. We are hopeful for a correction in prices over the next couple of months, with improved availability of containers and a decrease in the Red Sea impact.”
