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Tyre Stocks Dip as Rubber Prices Soar to Decade Highs
26 Aug
Summary
- Natural rubber prices hit multi-year highs due to supply concerns.
- Tyre makers face margin pressure from rising input costs.
- Industry investment in capacity expansion continues despite challenges.
Indian tyre stocks have shown a mixed recovery, but the sector is currently grappling with escalating natural rubber prices. Futures for natural rubber have surged to their highest point in over a decade, trading around 235 cents per kg as of August 25, 2026. Supply disruptions in Thailand, the world's largest producer, and the approaching end of the peak tapping season are key factors contributing to this price increase.
This rise in rubber prices coincides with elevated crude-linked raw material costs, exacerbating input cost pressures for tyre manufacturers. Crisil Ratings forecasts that operating margins for tyre makers will likely moderate to 11.5-12% in FY27 from 14.2% in FY26, due to raw material inflation outpacing staggered price adjustments.
Tyre companies are expected to pass on higher costs through calibrated, staggered price increases, aiming to absorb some inflation without drastically impacting consumer prices. Demand for tyres is projected to remain resilient, with overall volumes expected to grow 4-5% in FY27. This sustained demand, alongside ongoing expansion plans, supports significant industry investments of around ₹18,000 crore for FY27 and FY28.
