Strong demand to offset near-term cost pressure for tyre companies

MRF, Apollo among beneficiaries of higher demand, given dominant positions in growth segments

The tyre sector has fared better than others on the input costs front so far, as prices of its key input, natural rubber, continue to be benign. Natural rubber costs, which account for 40 per cent of a tyre company’s input costs, are down 15 per cent from the March 2017 quarter prices (year-on-year or y-o-y) and it has gone down 1.5 per cent since the September quarter. However, there could be near-term pressures, given supply side issues and higher crude oil prices.

Thailand, the world’s largest producer, Indonesia and Malaysia are looking at increasing prices by withholding exports. Factors