What is the outlook for tyre prices?

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What is the outlook for tyre prices?

Rubber prices have fallen globally by 20% from record highs. Arun Bajoria, President at JK Tyres and Philip Eapen, ED-Marketing at MRF give their views on the outlook for tyre prices, going forward.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Rubber prices should remain stable at current level: JKTyre JK Ind launches formula tyres Tyre industry deflated by high costs ALSO READ See latest News about JK Industries See previous management interviews See what other Experts & Brokerages are saying about JK Industries JK Tyre & Ind BSE | NSE 25/05/12 Are Mutual Funds betting on JK Tyre & Ind? Other Stocks in this news MRF |

Rubber prices have fallen globally by 20% from record highs. 10% of the tyre sector is likely to have already shifted to synthetic rubber. This shift to synthetic rubber by Indian tyre companies could affect tyre prices.

Arun Bajoria, President at JK Tyres and Philip Eapen, ED-Marketing at MRF give their views on the outlook for tyre prices, going forward.

Arun Bajoria believes that the fall in rubber prices is a positive sign. He further informs that there is no let-up in prices of carbon black or synthetic rubber and the other inputs like chemicals and butyl.

According to Philip Eapen, the industry is concerned about the volatility in prices. He also adds that they are on a wafer thin margin of profitability, which is not good for the industry. Eapen believes that there has to be a better profitability for the tyre industry, not only from the replacement factor, but also from OE (Original Equipment). Only then, the industry can prosper and be on par with the rest of the industries in the world.

Excerpts from CNBC-TV18's exclusive interview with Arun Bajoria & Philip Eapen:

Q: What is the trend that you have seen in rubber prices in the past month or so and how much of a drop has it been?

Bajoria: Rubber prices certainly have come down and this is a positive sign. However, there is no let-up in prices of carbon black or synthetic rubber and the other inputs like chemicals and butyl. So really speaking, rubber prices have come down by Rs 15-20.

But on the other hand, we are already seeing signs of synthetic rubber prices inching upwards again.

Q: Even when oil prices are falling, do you see that continuing or will lower oil prices have a bearish effect on that as well?

Bajoria: In the last two years, rubber prices have gone up by almost 49%, this is over '03-'04 and '04-'05. So we have to still watch for a little longer period and only then we can take a view.

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