Tyre Prices Rise As Costlier Crude Pinches Manufacturers
Why tyre prices might rise further.
Tyre prices have risen across India as manufacturers deal with an increase in input prices and a weaker rupee, according to BloombergQuint’s survey of dealers across 6 cities.
MRF, Ceat Ltd., Apollo Tyres Ltd. and JK Tyre Industries Ltd. have all raised prices in the range of 2.5-3 percent.
Brent crude hit $75 per barrel mark last month, its highest level since November 2014. Oil and its linked derivatives such as carbon black form an integral part of a tyre company’s raw material basket. In addition, a weaker rupee means imports become more expensive.
The increase in tyre prices comes at a time when both natural and synthetic rubber prices have remained largely stable at lower levels. MRF has increased the prices of tyres used by commercial vehicles by Rs 300-500 per tyre, effective May 5, according to one dealers surveyed by BloombergQuint.
MRF Ltd., India’s largest tyre maker by market value, highlighted the risk of rising commodity costs in a press release accompanying its earnings for the quarter ended March.
Escalation in the cost of crude based inputs remains a concern and will add pressure to the bottom-line. At the same time the competitive intensity in the industry continues to remain at fever-pitch due to anticipated ‘on—streaming’ of several Greenfield and Brownfield capacities by many players in the months ahead.MRF Press Release
With auto sales in top gear and a shortage of carbon black in the domestic market, dealers suggest there may be room for further price hikes in the second quarter of this financial year.