Profit Collapse: The Tire Industry Winter Is Colder Than Imagined(Oct 29)

Profit Collapse: The Tire Industry Winter Is Colder Than Imagined

Source: Sina Finance / Tire Report

On October 23, Zhongce Rubber released its third-quarter report: revenue of 36.079 billion yuan for the first three quarters, up 7.11% year-on-year; net profit of 2.854 billion yuan, down 18.77%. Third-quarter net profit alone was only 413 million yuan, plummeting 65.29%. A week earlier, Linglong Tire issued an even grimmer forecast: net profit of just 62-69 million yuan for the first three quarters, a decline of over 94% from 1.023 billion yuan in the same period last year, with non-GAAP profit turning negative.

Revenue rising while profits collapse, selling more tires but earning less, has become the defining reality of the tire industry in 2026.

The core problem lies in the price scissors. Zhongce operational data shows that third-quarter comprehensive procurement prices for five major raw materials rose 20.76% year-on-year, while average tire selling prices increased only 0.71%. The low-end market has fallen into a vicious cycle of declining volume and price. Since September, over 100 price increase notices have been issued, but factory-level increases of 3-5 percentage points are reduced to just 1 point by the time they reach the terminal, entirely absorbed by distribution channels. Whoever raises prices first loses customers.

Natural rubber reached 20,000 yuan/ton at the end of September, the first time since March 2017, and surged to 20,645 yuan/ton in early October, a near-nine-year high. Carbon black prices rose nearly 60%. Thailand production cut expectations continue to ferment, meaning fourth-quarter cost pressures will exceed those of the third quarter.

On the export front, EU anti-dumping duties took effect on July 8, with rates reaching as high as 45.3%, and the anti-subsidy final ruling is due before December 5. July exports to Europe were slashed by over 70%. The United States, Canada, and the Eurasian Economic Union have launched successive investigations.

On the demand side, September domestic auto sales fell 26% year-on-year, cutting the OE market in half. The replacement market has been dragged down by weak infrastructure and freight, with distributors afraid to stockpile. On the currency front, some tire companies reported foreign exchange losses exceeding 1 billion yuan in the first three quarters, directly turning profit into loss. Calculations show that a 3% exchange rate fluctuation can cause a 20% direct impact on profits.

Since September, 20 tire factories have issued shutdown notices, with some announcing 10-day holidays but remaining closed for 23 days. September rubber tire output fell 3.3% year-on-year, with semi-steel tire production dropping 20%. In the first week of October, operating rates for all-steel and semi-steel tires both fell to around 30%, comparable to Spring Festival levels, a rarity in nearly seven years.

Industry leaders still hold two trump cards: scale and overseas factories. Smaller manufacturers have no cards left. The 2026 tire business is the hardest in a decade, and this round of profit clearing has only just begun.

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