Tyre stocks on 'high' road

Expectedly, tyre stocks are doing very well today morning, just as they did yesterday. Apollo Tyres leads the pack, hitting a new 52-week high today at Rs.217.70. Ceat is also doing very well, up over 8% and this is after hitting a new high at Rs.839.50. JK Tyre has also hit a new high at Rs.391.55 and MRF too at Rs.30,243.70.

Tyres stocks are zooming into the stratosphere as rubber prices, which constitutes over 60% of its raw material cost, according to Rubber Board of India, has fallen down sharpest in the last five years. The price hit Rs.126/kg and this is a decline of over 25% from January’s price of Rs.169/kg.  This coupled with the fall in price of crude was good news for the tyre companies as crude derivatives make up for another 25-30% of tyre company costs.

Slowdown in China and over supply from Thailand and Indonesia have pushed down prices.