China's Semi-Steel Tire Market
A recent industry report released by Zhuochuang Information shows that the oversupply situation in China's semi-steel tire market is unlikely to fundamentally reverse in 2026, and industry competition will continue to intensify. From the supply side, the trend of capacity expansion has not slowed down, with an estimated 19 million new tires added this year. Meanwhile, due to adjustments in overseas capacity layout and optimization of the domestic industrial structure, approximately 10 million tires of capacity will be transferred.
Comprehensive calculations indicate that the net increase in capacity for the whole of 2026 will be approximately 9 million tires. This growth will further lower the industry's capacity utilization rate. Combined with the excess capacity already established in 2025, the overall industry operating rate is expected to remain at a low level of around 70% in 2026.
Weak growth in the export market is a key factor restricting the industry's supply-demand balance. China's semi-steel tire export dependence is as high as 50.54%, however, overseas markets will face multiple challenges in 2026.
In South America, the development of the automotive industry has been suppressed by the US tariffs on the local automotive industry, indirectly dragging down China's semi-steel tire exports to the region. The Middle East remains volatile due to ongoing geopolitical instability, resulting in unstable demand. Both of its core export regions are showing weakness.
More importantly, the EU's final anti-dumping investigation ruling is scheduled for June 2026. Although the preliminary ruling has been overturned, the final outcome remains uncertain, putting significant pressure on exporting companies. If high anti-dumping and countervailing duties are ultimately imposed, exports to the EU could experience a precipitous decline, further exacerbating the pressure on domestic production capacity.
The domestic market is a crucial support for demand, but its growth momentum is still constrained by multiple factors. In the supporting market, growth is primarily driven by the continued expansion of vehicle ownership and the increasing penetration rate of new energy vehicles. As of September 2025, China's vehicle ownership reached 363 million vehicles, with approximately 250 vehicles per 1,000 people, still possessing considerable growth potential compared to developed countries.
However, the growth momentum for passenger vehicle production and sales is expected to weaken in 2026, and the driving effect of new energy vehicles on supporting market demand is gradually slowing down, with the growth rate of the supporting market projected to narrow.
The replacement market has shown relative resilience, with the onset of the tire replacement cycle for new energy vehicles becoming a significant growth driver. As early-released new energy vehicles gradually enter their tire replacement period, coupled with the steady increase in the number of traditional gasoline vehicles, replacement market demand is expected to see a slight increase.
However, it should be noted that consumer willingness to replace tires weakened in 2025. If end-consumer spending power does not show a significant improvement in 2026, replacement demand growth may fall short of expectations.
Meanwhile, the differentiation among companies within the industry is intensifying: leading companies are maintaining high operating rates due to their advantages in new energy vehicle components and export orders; while small and medium-sized enterprises generally face the dual pressures of order shortages and high inventory levels.
The industry is also facing the dual pressures of rising costs and intensified competition. At the beginning of 2026, the prices of core raw materials such as natural rubber and synthetic rubber collectively rose, and since rubber costs account for more than 50% of tire manufacturing costs, corporate profit margins were severely squeezed.
Against the backdrop of overcapacity, companies are finding it difficult to fully pass on cost pressures to downstream customers. Some factories have even resorted to price reductions of 5-8 percentage points to boost sales volume, causing the prices of mainstream specifications to approach the cost line.
In this environment, the industry reshuffling process is expected to accelerate, with outdated production capacity gradually exiting the market. Companies with advantages in technology research and development, brand building, and globalization are expected to stand out, thereby driving the industry towards high-quality and high-value-added transformation.
