Finished tyres sit in a storage area (Photographer: Andrey Rudakov/Bloomberg)

Falling Rubber Prices Won’t Help Tyre Makers Much, CEAT Says

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.