Ceat expects further price hikes as Indian natural rubber soars

Mumbai, India – Indian tire maker Ceat Ltd has introduced a series of price increases and expects to ‘more instalments’ as the cost of raw materials, particularly natural rubber (NR) increases in the country.

Domestic NR prices have surged by about 25% to 30% over the past few months and currently, stand at INR207/kg, said managing director and CEO Arnab Banerjee.

The figure “is the highest in the last 13 years,” said the Ceat leader during a 19 July first quarter earnings call.

The tire maker “mitigated” the effect of raw material prices in the replacement and international markets by “taking progressive price hikes in steps and will continue to do so in second quarter (ending 30 Sept),” Banerjee added.

Elaborating further, CFO Kumar Subbiah said NR prices in India were currently at a premium to international rubber prices to the extent of about INR10 to INR12 per kg.

This, he said, is due to “short-term supply demand gap” while a further steep increase in ocean freight costs has also contributed to an increase in the landed prices of NR.

However, according to the Ceat finance chief, NR prices are expected to “cool off progressively” from end of the current quarter.

“Overall, we expect raw material prices in the second quarter to be higher by about 5% to 6% over quarter,” he added.