The Hindu Business Line : Tyre stocks fall on firm rubber prices

The rise in the price of natural rubber as well as the price of crude oil affect rubber prices, as synthetic rubber is a crude oil derivative, said analysts.

Despite the Government ban of rubber futures, the price of rubber moved up in today’s market.

Though it fell by Rs 4 a kg on Thursday, immediately after the Government ban, it gained marginally on Friday to Rs 116.50. Tyre companies use either synthetic or natural rubber for manufacturing tyres, depending on the price differential in the rubber market.

A declining market — with the Sensex closing lower by 343 points on Friday and shedding 863 points during the last week — also seems to have had an impact on the tyre stocks.

Impact on demand

All the five tyre stocks registered losses over the last one week; they fell between 2.5 per cent and 6 per cent on Friday.

Moreover, with oil prices going up, tyre consumption by the auto sector was also going to have some impact on demand, an analyst said.

Crude oil has been shooting up over the past one month from around $105 a barrel to over $124 a barrel.

Natural rubber too has gone up taking a cue from synthetic rubber prices, which have direct correlation to crude prices.

“The tyre stocks fell mostly due to the rubber prices shooting up,” said Mr Rishabh Bagaria, an analyst tracking auto ancillaries at broking firm Pioneer Invest Corp. Mr Bagaria added: “ Tyre companies cannot store rubber stocks beyond one or one-and-a-half months of their requirement due to warehousing constraints.”

Among the tyre companies, Apollo Tyres closed with the maximum loss of 6.03 per cent at Rs 43.6.

CEAT closed down by 3.76 per cent at Rs 128.05; J K Tyre & Industries ended at Rs 134.70, with a loss of 3.72 per cent; MRF Ltd at Rs 4345.30, lower by 2.96 per cent; and Falcon Tyres at Rs 145, down by 2.68 per cent.

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