As prices of natural rubber is on a downward swing causing much upheaval in the tyre industry. Prices of raw rubber which is an essential component in the manufacture of tyres was at its zenith a few years ago. At the end of 2010 and start of 2011 prices of raw rubber was at an all time high of $4.5 per kg resulting in increased growth and outstanding demand.
The past year however, has seen a drastic price cut with prices falling to as low as $3.1 per kg. This has led to prices of tyres being revised on 7 occasions resulting in fact to a cumulative price rise of 15 to 20%. Tyre dealer’s federation is demanding that prices be reduced by 18 to 20% but Original Equipment Manufacturers are averse to this price cut showing their unwillingness to bring down prices due to a number of reasons.
OEMs argue that though prices of raw materials are being reduced, other raw materials that go into the manufacture of tyres like synthetic rubber, rubber chemicals and steel tyre cord have all experienced a price rise. Synthetic runner and carbon black has in fact seen a 7% to 10% rise in prices not to mention the depreciating value of the rupee against the dollar which also puts a strain on tyre manufacturers in their procurement of raw rubber from Thailand, a major producer of crude rubber along with cost of manufacture, supply logistics and rising costs of infrastructure