Tyre prices soar on rising costs for raw materials

Global hikes in tyre and tube-making raw materials rates and a factory rampage at local key manufacturer Gazi Tyres have caused a shortage and price hikes for the auto item used in lightweight two- and three-wheelers like motorbikes and auto-rickshaws.

According to market insiders, this could lead to drivers increasing their transport fares.

After the change of government on August 5, Gazi Tyres, owned by Awami League minister Golam Dastagir Gazi, faced repeated arson attacks and looting at its factory in Narayanganj.

Following the abrupt shutdown of Gazi Tyres, which held more than half of the local market share, tyre prices of other brands have increased by Tk 200 to Tk 800 per piece in the past week, depending on the segment.

Imported tyre prices have also risen by Tk 300 to Tk 500 for rickshaws, auto-rickshaws, light commercial vehicles, motorcycles and battery-powered easy bikes, according to market insiders.

However, other tyre manufacturers have ruled out that the suspension of Gazi's production alone is responsible for the price increases.

They attribute the overall price hike to increased costs of imported raw materials, freight charges and bank interest.

According to Mustafizur Rahman, assistant general manager (commercial marketing) of the Gazi Auto Tyres factory, they used to manufacture and supply more than 70 percent of rickshaw tyres and around 55 percent of auto-rickshaw, rickshaw van and CNG-run three-wheeler tyres.

"The retailers were shocked by the sudden closure of the factory," he said, adding that supply to the local market may decrease further in the coming months.

This could cause a huge disruption in the supply chain, he said.

Tyre and tube traders and importers in the Kadamtoli area of the port city of Chattogram said tyre prices for both two- and three-wheelers, as well as heavier segments, have been increasing over the past year.

However, the average price per tyre of various brands has increased by Tk 200 to Tk 500 in the past 15 days, forcing many drivers to raise transport fares.

Tyre manufacturers increased prices following the supply stoppage by Gazi Tyres, according to Jasim Uddin, a retailer at the Kadamtoli market.

"Previously, I sold CNG auto-rickshaw tyres for Tk 1,900," he said. "Now they have risen to Tk 2,100-Tk 2,200 depending on brands."

Meanwhile, Rashid Ahmed, former general secretary of the Chattogram Tyre Tube Importers and Dealers Association, said the increase in the price of rubber on the international market has led to higher prices for imported tyres.

Similar to Chattogram retailer Jasim Uddin, Sanjay Saha, owner of Niloy Machinery Store in Patuakhali, said Gazi currently does not have tyre tubes available. As a result, prices of other company's motorcycle tyres have increased by Tk 200 to Tk 300 per piece.

Mohammad Jiban, owner of Hawk Stores in Patuakhali, said prices of easy-bike tyres have increased by Tk 500 to Tk 600, and truck tyres by Tk 2,000 to Tk 3,000 recently, depending on brands.

Luthful Bari, director (operations) of Meghna Group, said there is no possibility of an acute shortage of tyres in the market, except for truck and bus tyres, as other players do not specialise in large tyres.

He said MTF Tyre, a concern of Meghna Group, has expanded its capacity to fill the market gap created by the absence of Gazi Tyres.

He said there are five players manufacturing tyres for rickshaws, motorcycles, cycles, and CNG-powered auto-rickshaws.

He dismissed allegations that the price increase of tyres in the market was solely due to the fire at the Gazi Tyre factory.

According to him, the price increase was primarily driven by the surge in the price of major raw materials like rubber sheets, which jumped to Tk 326 per kg foot from Tk 160 per kg in the last three months.

Shafiqur Rahman, managing director of Rupsha Tyres & Chemicals Limited, said the increase in tyre prices was not solely due to the incident in Narayanganj but was also influenced by rising raw material prices, bank interest and freight costs.

However, he said the increase in tyre prices was insignificant compared to the rise in production costs over the past three months.