Natural Rubber Prices to Pressure Profit Margins; Credit Profiles Remain Stable

Tyre manufacturers in India are bracing for a second consecutive year of single-digit revenue growth as rising natural rubber prices and global economic challenges weigh on the sector. Revenue is forecast to grow seven percent to eight percent in the current fiscal year, driven by a three percent to four percent increase in both realisations and volume, according to an analysis by CRISIL Ratings. 

While this marks a significant improvement from the previous fiscal year, when revenue grew at approximately four percent, it falls short of the compound annual growth rate of 21 percent between fiscal years 2021 and 2023. 

Gradual price increases to offset cost pressures 

Tyre makers are implementing gradual price hikes to mitigate the impact of surging natural rubber costs, which account for nearly 50 percent of raw material expenses. Realisation growth is expected to be staggered throughout the year as manufacturers carefully balance price increases with market demand. 

Volume growth, projected at three percent to four percent, will be driven primarily by replacement demand rather than new vehicle sales. However, the limited ability to fully pass on higher input costs will strain operating margins, which are expected to shrink by approximately 300 basis points to 13 percent this fiscal year, down from 16 percent in the previous year. 

 “Domestic demand accounts for around 75 percent of the industry’s sales (in tonnage terms), while the rest is exported. About two-thirds of the domestic demand is from the replacement segment and the rest is from original equipment manufacturers (OEMs). This fiscal, replacement demand, mainly from commercial and passenger vehicles, will drive volume growth, while OEM demand is expected to rise only between one and two percent due to slow growth in commercial vehicle sales,” says Anuj Sethi, Senior Director, CRISIL Ratings.

Stable cash flows and balance sheets 

Despite these challenges, tyre makers are expected to maintain stable credit profiles due to robust balance sheets and prudent capital expenditure. Cash flow generation, though modestly affected, will remain substantial. Gearing and interest coverage ratios are projected to stay steady at approximately 0.3 times and seven to eight times, respectively, consistent with last fiscal year’s levels. 

A CRISIL Ratings analysis of the six largest tyre manufacturers, which together account for about 87 percent of the industry’s revenue, supports this outlook. 

Export growth weakens 

Export growth is forecast to remain muted at two percent to three percent for the year, reflecting sluggish demand in key overseas markets such as North America and Europe, which collectively account for 60 percent of India’s tyre exports. Geopolitical tensions and supply-chain disruptions have exacerbated the situation, leading to higher freight costs and extended transit times, further curbing export demand. 

Global shortages drive up raw material costs 

The sharp rise in natural rubber prices is primarily attributed to a global supply shortage caused by adverse weather conditions in leading producer countries like Thailand and Vietnam, which together account for approximately 50 percent of global rubber production. 

In addition to natural rubber, the cost of other critical raw materials, including nylon tyre cords, carbon black, styrene-butadiene rubber and polybutadiene rubber, remains volatile due to their dependence on crude oil prices. 

Outlook and challenges 

Looking ahead, tyre makers will likely continue to face pressures from raw material price volatility, original equipment manufacturer (OEM) demand fluctuations, potential changes in import duties, and the implementation of Extended Producer Responsibility regulations. 

Naren Kartic. K, Associate Director, CRISIL Ratings, says, “To support domestic tyre manufacturers, the Indian government has extended the countervailing duty on Chinese radial tyres for five years to ease competition. Plus, given the sluggish demand and pressure on operating margins, tyre makers are implementing appropriate price increases and prudent capital expenditure to ensure that capital efficiencies remain satisfactory. With capacity utilisation at  around 80 percent, tyre manufacturers rated by us are investing around INR 55 billion this fiscal, slightly lower than last fiscal, with a focus on necessary capacity enhancements and debottlenecking.”

Comments (0)

ADD COMMENT

Link Copied!

Pirelli is all set for the winter season with its winter tyre range that is renewed over the past two years. The newly launched Scorpion Winter 3 joins the P Zero Winter 2 for high-performance cars and the Cinturato Winter 3 for saloons and crossovers. The range is available with Pirelli Elect technology for electric vehicles. Independent tests by European organisations have placed Pirelli winter tyres at the front in safety-related areas, while the Cinturato All Season SF3 has recorded four victories and six additional podium finishes.

Winter tyres or suitable equipment are required from 15 November to 15 April. Most winter driving occurs on dry and wet roads. Below 7°C, winter compounds offer more grip than summer compounds, and the tread pattern helps counter aquaplaning and generate traction on snow. Sidewall markings indicate capability: M+S identifies a product for challenging surfaces, while 3PMSF certifies testing in harsh conditions. An appropriate winter driving style includes increased safety distance, avoiding sudden acceleration and reducing brake use in favour of engine braking.

The Cinturato Winter 3 took first place in the 2026 ADAC winter tyre test in size 225/50 R17 against 16 models, earning a highly recommended rating with the best wet score and the highest assessment for driving safety. It won the AvD test in size 225/45 R17 against 15 tyres with a very good rating. It also finished first in the Auto Bild comparison in size 205/55 R16 on a Volkswagen Golf against 14 tyres with an exemplary rating. Podium finishes followed in tests by Auto Express, Auto Bild Allrad and Tyre Reviews, giving six podium finishes in seven tests, including three victories.

The Scorpion Winter 3 debuted with a victory in the alVolante comparison in size 235/60 R18 on an Alfa Romeo Stelvio, ranking first among six winter tyres. Its wet performance, shortest braking distance, fastest lap time and progressive reactions set it apart. It was judged consistent and predictable on snow and balanced on dry roads.

In the annual Auto Bild super comparative test, the P Zero Winter 2 finished on the podium with an exemplary rating, thanks to precise driving behaviour in wet and dry conditions and braking performance on both surfaces. The Cinturato Winter 3, Scorpion Winter 3 and P Zero Winter 2 are available with Pirelli Elect technology on dedicated fitments for Europe's electric vehicle fleet. Elect addresses low rolling resistance for range, acoustic comfort, longer tyre life, grip for immediate torque and a reinforced structure for battery weight.

All-season tyres suit drivers mainly in urban areas covering up to 20,000 km per year without frequent heavy snowfall. Higher mileage, regular mountain travel or high-performance cars generally call for winter tyres. The Cinturato All Season SF3 carries the 3PMSF marking and has four victories in comparisons by Auto Zeitung, Reifentester, Auto Express and Que Choisir, plus six additional podium finishes. The new Scorpion All Season SF3 extends the approach to SUVs.

Comments (0)

ADD COMMENT

Link Copied!

Nokian Tyres will withdraw its sponsorship of the 2027 IIHF Ice Hockey World Championship should Russia be permitted to compete, the company has confirmed. The decision follows a Court of Arbitration for Sport (CAS) ruling that cleared Russian national teams to return to international ice hockey. Nokian Tyres stated that continuing the sponsorship under such circumstances would conflict with its values. Tiina Frazer, SVP of Brand, Marketing and Communications, explained that while the 2026 tournament cooperation proved highly successful, the company felt compelled to act on its principles regarding Russian participation.

The tyre manufacturer had been named an Official Sponsor for both the 2026 and 2027 IIHF Ice Hockey World Championships in late 2025. Its 2026 involvement included the ‘Carve the Corners’ contest, running from 6 February to 20 March, which offered fans in the United States and Canada a chance to win a trip to the tournament. The 2026 event, held from 15 to 31 May, featured 64 games with 16 top national teams competing for the title and stands as the world’s largest annual winter sports event.

Frazer said, “Our sponsorship agreement with the IIHF covers the 2026 and 2027 World Championships, and our cooperation around the 2026 tournament was very successful. However, under the current circumstances, continuing the sponsorship if Russia participates would not be aligned with our values. We have therefore decided to end our sponsorship of the 2027 World Championship should Russia be allowed to take part.”

Comments (0)

ADD COMMENT

Link Copied!

Sri Trang Agro-Industry Public Company Limited (STA), the world's largest fully integrated natural rubber company, has been honoured at the Intelligent Industry Awards 2026, an accolade bestowed by the National Science and Technology Development Agency (NSTDA). The award was formally received on 30 October 2026 at Bangkok's S31 Sukhumvit Hotel by Executive Director Vitchaphol Sincharoenkul, accompanied by Akarat Mattayangkul, Factory Manager of the Huai Nang Branch, and Poowanart Laoprasert, Factory Manager of the Loei Branch.

Three of the company's production sites earned recognition under the award. The Loei and Huai Nang branches in Trang Province were cited for their technically specified rubber (TSR) operations, while the Kanchanadit Branch in Surat Thani Province was acknowledged for latex production. Evaluators placed weight on technology deployments that yield demonstrable outcomes, alongside sustained organisational development spanning operational processes, personnel, energy and sustainability.

Research and development form a central pillar of STA's strategy, merging its natural rubber know-how with digital tools and artificial intelligence. Among its flagship efforts is the Sri Trang AI Machine (SAM), which harnesses AI to bolster analysis and decision-making in production. The company also runs an ‘AI Clinic’ that invites staff from every department to pitch ideas, exchange experiences and obtain expert advice on embedding AI in routine tasks, thereby streamlining workflows, aiding decisions and lifting operational efficiency while nurturing a culture of technological learning.

The accolade underscores STA's drive towards Industry 4.0 through digital adoption, automation, innovation, workforce development and prudent resource management. It represents a further milestone in Sri Trang Group's evolution, reinforcing its emphasis on technology, people and resource efficiency as it continues to champion the sustainable development of Thailand's rubber sector.

Comments (0)

ADD COMMENT

Link Copied!

Professor James Busfield of Queen Mary University of London has been awarded the prestigious IRCO Medal by the International Rubber Conference Organisation (IRCO) in recognition of his longstanding contribution to international rubber conferences. The honour was presented by IRCO Executive Chairman Michael Clayton at IRC 2026 in Aichi, Japan, immediately before Busfield delivered his plenary lecture. The IRCO Committee unanimously approved the award at its meeting in Bangkok on 2 December 2025.

His involvement with the organisation spans more than a decade, having represented the United Kingdom on the IRCO Committee since 2013. He chaired and organised IRC 2019 in London, attracting 550 delegates, and led the organisation of RubberCon events in Manchester in 2014 and Edinburgh in 2023, the latter welcoming over 310 participants from 26 countries. A frequent plenary and keynote speaker, he also regularly involves postgraduate students in these international gatherings, providing opportunities to showcase their research and build professional connections.

Left to right: Michael Clayton, Executive Chairman of IRCO; Professor James Busfield, Queen Mary University of London; and Professor Mikihito Takenaka, Congress Chair of IRC2026 AICHI and Professor at the Institute for Chemical Research, Kyoto University.

Beyond his international conference work, Busfield has headed the Elastomer Group at the Institute of Materials, Minerals and Mining (IOM3) since 1995. Under his leadership, the group has delivered more than 100 meetings and conferences for the rubber sector while introducing hybrid events to expand global accessibility. At Queen Mary, he serves as Professor of Materials, National Teaching Fellow, Deputy Head of School and Head of the UK's largest soft matter research group. His career began in automotive suspension engineering before he completed his doctorate under Professor Alan Thomas.

Busfield's research encompasses rubber friction, fatigue, fracture, recycling and smart materials, supported by more than 190 peer-reviewed publications and industrial collaborations with Bridgestone, Continental, Aston Martin F1 and Schlumberger. Elected a Fellow of the Royal Academy of Engineering in 2020, he has also received the Colwyn Medal (2009), the American Chemical Society Rubber Division's George Stafford Whitby Award (2021) and the IOM3 T B Marsden Medal (2024).

Michael Clayton, Executive Chairman of IRCO, said, “James never travels alone. At every conference he brings his students, and gives them the chance to present, to meet people and to begin their careers in our industry. He is incredibly generous with his time, and one of our industry's most engaging speakers. Professor Busfield is an incredibly worthy recipient of the IRCO Medal.”

Professor James Busfield said, “It is a great honour to receive the IRCO Medal. IRCO has coordinated the International Rubber Conference and RubberCon events for about 60 years, and I have been fortunate to have been a part of that community for about half of that time. I enjoy greatly participating in these conferences and value the opportunity to meet the global rubber experts, discuss with them new innovations and together help to move the discipline and our industry forward. My thanks are extended to all of those from the global rubber community who have worked to make our IRCO events so successful.”

Comments (0)

ADD COMMENT

Link Copied!