Natural rubber prices may have stabilized but tyre companies are not looking at price cuts despite the attraction of festival demand. Tyre marketers say their input cost gains have been more than neutralized by the depreciation of the rupee which has squeezed imported inputs and pinched Indian brands in export markets as well.

 

"Natural rubber prices have gone up in July-August to around Rs 195 per kg," said Vikram Malhotra, V-P-sales & marketing, JK Tyres. "But natural rubber is not the only raw material that is critical to tyre manufacturing. We're importing synthetic rubber and oil and forex fluctuation is beating us with the 20% slide in the rupee. We have taken a big hit in both the first and second quarters due to the forex situation."

 

Rubber is the most critical raw material for tyre companies . Low rubber price has helped the margins of all tyremakers offering a buffer during the demand slowdown. Rubber prices started falling from January 2012 and hit a low of Rs 160 per kg in January 2013. Since then, though, it has been on the rise and is now in the range of around Rs 190-195 per kg which is near the January 2012 price level. Even at this level, the margins are strong enough for tyre companies to be able to post good numbers in Q1 as shown by the results of tyre majors like Apollo and MRF.