Tyre Industry Needs 4% Price Hike to Offset Natural Rubber Costs

Assuming foreign exchange rates remain stable, the sky-rocketing natural rubber price means the tyre industry will have to increase selling price by 3-4% to offset this raw material. That’s the view of Deutsche Bank analysts who report in a recent investors note that the natural rubber price has doubled over the last 12 months from US$1.5/kg to US$3.0/kg (RSS3 grade). “This increase will have a four to six months lag effect on tyre companies’ profit and loss…So far, we have no reason to be worried since…end market volumes are recovering (especially on passenger car tyres…inventories at dealers are low (sell in markets have been worse than sell out markets),” they analysts explained.