Double whammy for tyre firms: Rubber cost zooms, auto demand crawls

Natural rubber prices up 23% since January; weak demand in the replacement market, tepid exports add to manufacturers' woes

Natural rubber prices have turned positive after a gap of two years in the domestic market during the first quarter of the current fiscal year. While this is a good news for farmers, tyre companies have been hit with a double whammy as demand for tyres is stagnant due to the slowdown in auto sales and raw material prices are only rising.

The price of natural rubber is up a staggering 23 per cent from a low of Rs 11,915 in January and is currently at Rs 14,579, according to Rubber Board data.

Mitul Shah, Research Analyst, Reliance Securities said,