In what comes as a setback for tyre companies, rubber prices have surged to a 2-month high on the back of thinning supply. Domestic prices rose 12 per cent in June alone while globally, prices have shot up 15 per cent.
Speaking to Bloomberg TV India, JK Tyres President Vivek Kamra says prices seen in December-February were unrealistically low and hence, some rise in rubber prices was expected. The company may raise prices of tyres to some extent, he added.
From ₹205 a kg in June 2011, rubber prices fell to almost ₹94 in February 2016 and now have surged to ₹143. How does this impact your company?
I think prices are still below average of FY15. So, we don’t expect prices to last at that level it reached in December-February because those were unrealistic prices. They haven’t reached those levels in decades. There was bound to be some recovery for this business to be viable. The short-term surge in June is because of a little bit of imbalance in orders and we think these prices will settle down in the next couple of months.
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Will you review your prices?
Markets are competitive. We will see different segments having different pricing challenges. We do see the need to increase prices in some of our products though not across-the-board. There will be some price improvement but not substantial as the market is highly competitive both in India and internationally.
What’s the price trend in other raw materials like carbon black and crude oil?
Synthetic rubber and carbon black are the other large input components in tyre making. Synthetic rubber prices have not moved substantially. So is carbon black, though we did see some shortage in supplies. Of course, they will follow to some extent crude and Brent oil prices.
JK Tyres’ international operations – especially Mexican operations – have been a little strained. What is your view on that?
Our Mexican units have substantially increased their volumes and their presence in the North American markets. Next year will be much better — both in India and in terms of exports from Mexico. We see a significant improvement in exports in North America and we have also initiated flow of exports into Western Europe and Turkey.
