Rubber prices up 33%; tyre makers under pressure

Tyre manufacturers are facing significant pressure due to skyrocketing natural rubber prices, which have surged by over 33% in the last five months of fiscal 2025, according to a recent report by Crisil.

This dramatic increase has created a challenging environment for the tyre industry, particularly as natural rubber constitutes a vital component in tyre production, accounting for 20-40% of the material used, depending on the type of tyre. The tyre industry, in fact, is the largest consumer of natural rubber, consuming about 80% of the total supply in the country. As the price of natural rubber breaches Rs 200 per kilogramme, the industry is grappling with higher costs and strained profitability.

Historical Context and Recent Developments

For much of the past decade, natural rubber prices remained relatively subdued, providing some stability to tyre manufacturers. The last significant price surge occurred in 2011, following the global financial crisis. At that time, prices hit an all-time high, causing widespread concern within the industry. However, the current situation has many to 2011, with prices once again reaching critical levels. The difference today, as Crisil’s report highlights, is that the recent price spike is driven by deeper structural issues rather than temporary disruptions.