Falling Rubber Prices Won’t Help Tyre Makers Much, CEAT Says
There will be 2-3 percent impact of raw material costs in the coming quarters, Subbiah Kumar, CFO of CEAT Ltd, said.
CEAT Ltd. said falling rubber prices are unlikely to lower raw material costs for tyre makers as a weakening rupee and higher crude offset the gains. Tyre makers use mix of natural and synthetic rubber—a derivative of crude oil.
“Natural rubber forms nearly one-third of costs for tyres,” Subbiah Kumar, chief financial officer of the country’s fourth-largest tyre maker by market cap, told BloombergQuint in an interview. “Natural rubber prices have remained range-bound in the domestic market.” There would be 2-3 percent impact of raw material costs in the coming quarters, he said.
SICOM block rubber prices, the benchmark for rubber prices globally, fell to $1,400-1,450 a tonne from $1,450-1,500 a tonne in April. Natural rubber prices in India have been hovering around Rs 125 a kg (ex-Kerala).
CEAT manufacturers over 1.5 crore tyres a year for commercial vehicles, passenger cars and two-wheelers.