Domestic tyres manufacturers have witnessed another quarter of favourable raw material prices mostly as natural rubber (NR) prices saw a decline of 5% (QoQ) to Rs 149/Kg in the domestic market.
”However, with international rubber prices collapsed much more (10% QoQ to |140/Kg) owing to fears of Chinese slowdown concerns. The global prices have recently further fallen as commentary from Thai government towards selling of previous stockpiles caused panic,” said ICICIdirect.
”The domestic prices typically in Q4 witness an up-move considering that supply from Kerala reduces as tapping season tends to end by December. The INR depreciation coupled with decline in prices of crude derivatives is also going to aid reduction in costs towards raw materials like synthetic rubber, nylon tyre cord,” it said.
”Rubber contributes 50% in volume terms and 55-60% of the total raw material cost for tyre companies, depending on the product mix. On the tyre makers side the declines in rubber prices have not led to any significant price cuts as demand from replacement market has remained steady and all the companies have focussed more on bottom line growth in place of top line growth,” it added.
