High input costs to drive up tyre prices

Leading tyre manufacturers Apollo Tyres and JK Industries said tyre prices could go up in the near-term if input costs continue to rise.

In last three months, natural rubber prices have gone up 10 per cent on year, while crude oil prices are 35 per cent higher.

The tyre industry is heavily dependent on natural rubber and crude-oil based raw materials like tyre cord fabric, carbon black and synthetic rubber.

"Rising input costs means the industry will now have no option but to pass this (increase in input costs) on in the form of price increase to our customers," Neeraj Kanwar, chief operating officer, Apollo Tyres said.

Over the past year, high prices of natural rubber and crude oil have posed an enormous challenge for the tyre industry. Raw material prices have particularly seen a surge since January.

Tyre manufacturers also expressed apprehensions over the cheap, unwarranted tyre import from China.

Import duty on natural rubber is 20 per cent. However, the duty on imported finished tyres from China is only 10 per cent, said Raghupati Singhania, vice-chairman and managing director, JK Industries.

"We are amazed by the fact that while natural rubber is being exported; cheap finished products are being dumped by China. Imported tyres are flooding the Indian market. The issue needs to be looked into," he said.

Singhania said prices of natural rubber could rise further and put pressure on the margins of tyre companies.

According to traders, natural rubber is likely to see a price rise of about two rupees per kilogram in April.

"Profitability of tyre companies is being severely adversely affected. I think there is no other option but to raise prices," said Rumi Chhabra, managing director, Metro Tyres.