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According to Crisil Market Intelligence and Analytics, the increased prices of natural rubber, which are much higher than the trend of the last decade, may impact the profitability of tyre manufacturers. According to a PTI report, Crisil said in a statement that tyre manufacturers are going through a difficult phase as the price of natural rubber has increased by more than 33 per cent in the first five months of this financial year amid strong demand and supply shortage, which may impact profitability.
It said that domestic prices of natural rubber closed at an average of Rs 238 per kg in August, which is much higher than the trend of the last decade. Pushan Sharma, Director (Research), Crisil Market Intelligence and Analytics, said that between FY 2011 and 2023, global rubber production increased by 35 per cent, while demand increased by 40 per cent, which led to a shortage of supply and increased prices. Prices expected to remain high Mohit Adnani, Associate Director- Research, Crisil Market Intelligence and Analytics, said, "Natural rubber prices are expected to remain high due to further increase in demand and limited supply, which will impact the margins of tire manufacturers even beyond FY 2025." The last time rubber prices crossed the Rs 200 per kg mark was in 2011, which rose due to improved demand after the global financial crisis, and was also helped by the accommodative stance of the US Federal Reserve and other central banks. Between 2008 and 2011, prices registered a compound annual growth rate of 101 per cent. However, this three-year growth trend was not sustained and prices remained below Rs 150 per kg on an average for a decade thereafter.
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