Tyre Makers Hit By Rising Crude Oil Prices

The shares of tyre companies have seen a recent dip due to the rise in the rates of crude oil. This comes amidst ongoing demonetisation that too has made an impact on the tyre industry. There are serious concerns among the tyre industry about their profits getting plummet as the rates of crude oil hit an 18 month high earlier in the week. The crude oil price is almost 50% higher than it was in the same period last year.

According to analysts, companies in the tyre replacement sector will be hit hard as their 35% raw material comes from crude oil derivatives, importantly synthetic rubber. As per Ashok Ramineni, an analyst at Karvy Stock Broking, because of lower pricing power and higher imports from China at lower costs, the commercial tyre makers could end up bearing the cost of a rise in crude prices.

JK Tyres and Apollo Tyres are already suffering from demonetisation as the former is down by 16% since the government announced the plans for banning 500 & 1000 notes. Experts believe companies with bigger pricing power like TVS Srichakra and MRF would be able to wither the storm as they will pass the price hike to original equipment manufacturers.

If analysts are to believe then there is a good possibility of even Indian air carriers increasing their fare to counter rising oil prices.

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Author: Ankit verma

My need for speed began at a very early age and I realised this as soon as I got my first bicycle at the age of 8. When all the other kids would break downhill I would pedal harder just to go faster and enjoy the thrill. Adding to my interest for speed, I grew engrossed in the working mechanics of two wheelers thanks to my father as he is a hydraulic mechanic and would take me along with him on his repair sessions. Eventually I became familiar with the tools and basic technical concepts of two wheelers.Super sport and sport tourers are more of my liking and the sparks to these flames were ignited the first time I experienced the maddening power of a Yamaha YZF R1. I was just 14 years old at the time and got to ride as a pillion with an older acquaintance. This one short ride influenced my every decision in terms of the bikes I want to own. As of today I’m 26 years old and a proud owner of a Yamaha Fz15 version 2.0 and a Kawasaki Ninja 650 2014 model having clocked a decent 30k Kms only while touring, waiting to clock 1000s more as riding makes me feel whole again after enduring the dismal routines of life. Read more