Tyre Makers Struggle as Natural Rubber Prices Soar in 2025
Tyre manufacturers in India are facing significant challenges due to a 33% surge in natural rubber prices over the last five months of fiscal 2025, according to a recent report by Crisil.
Rising Costs and Supply Issues
Natural rubber, which constitutes 20-40% of the weight in tyre manufacturing, has seen its price exceed Rs 200 per kilogram. This situation is reminiscent of the 2011 price surge. The tyre industry consumes around 80% of the natural rubber in the country.
Supply and Demand Imbalance
The report highlights that the current price increase is due to a fundamental imbalance between supply and demand. Between fiscals 2011 and 2023, global natural rubber production grew by 35%, while demand surged by 40%. This gap has left the market struggling to meet the needs of tyre manufacturers.
Impact on Tyre Manufacturers
Unlike previous price surges caused by short-term disruptions, this increase reflects deeper structural issues. Despite steady growth in the automobile sector, rubber supplies have not kept pace. Tyre manufacturers are attempting to pass on costs to consumers by increasing tyre prices, but competitive pressures limit this, squeezing profitability.
Doubts Revealed
Tyre Makers -: Tyre makers are companies that produce tyres, which are the rubber coverings that go around the wheels of vehicles like cars and bikes.
Natural Rubber -: Natural rubber is a material made from the sap of rubber trees. It is used to make many products, including tyres.
Prices Soar -: When prices soar, it means they go up a lot and very quickly.
Fiscal 2025 -: Fiscal 2025 refers to the financial year 2025, which is a period used for accounting and budgeting by businesses and governments.
Rs 200 per kilogram -: Rs 200 per kilogram means that one kilogram of natural rubber costs 200 Indian Rupees.
2011 price surge -: The 2011 price surge refers to a time in 2011 when the prices of natural rubber went up a lot, similar to what is happening now.
Demand outpacing global production -: This means that more people want natural rubber than the amount that is being made around the world.
Competitive pressures -: Competitive pressures are the challenges companies face from other companies trying to sell similar products at lower prices.
Profitability -: Profitability is the ability of a company to make money after paying all its costs.
