Tyre firms may raise prices by 5%
tThis will be the fourth rise since January; prices have risen 15-20% in last 10 months.
Tyre companies may raise prices again next month due to an increase in natural rubber (NR) rates in the recent weeks. The increase might be four-five per cent on an average, said industry sources.
This would be the fourth increase since January. Prices have risen 15-20 per cent in the last 10 months.
The price of benchmark NR grade RSS-4 was Rs 203 a kg on Tuesday in the local markets.
Apollo Tyres, one of the leading companies in India, is planning to increase car tyre prices this month. The prices of truck and bus tyres will be raised next month.
According to Satish Sharma, chief, India operations, Apollo Tyres, the sector cannot grow by absorbing the rise in rubber prices. So, the price increase is inevitable and only the quantum of increase in various categories is to be decided. We were planning to announce our new price list by next month, he said.
He added demand was good but not so strong in truck/bus and mining segments. Because of this, most of the companies are postponing the next round of price increase, he said, adding it would not be possible to continue with the present prices as rubber had crossed Rs 200 a kg. The demand is picking up only in the car segment.
“An increase to the tune of 14-15 per cent is needed to nullify the impact of the huge increase in rubber prices. The current price of tyres is based on a rubber price of Rs 170 a kg. But on Tuesday, the local price increased to Rs 203 a kg,” Sharma added.
The tyre sector in not in a position for an increase of 14-15 per cent at one go due to various factors. So the next round of increase might be in a range of four-five per cent. Since April, prices of tyres increased 10 per cent.
According to Rubber Board data, the consumption of NR by tyre manufacturers increased five per cent on an average during April-October. The pressure of NR price rise on tyre majors is strong as 45 per cent of their raw material is rubber.
Around 60 per cent of the total yearly consumption of rubber is by the tyre sector. According to the Rubber Board data, price of rubber almost doubled during last 12 months as the average price in November 2009 was Rs 113 a kg.