Shipping Costs Explode for Tire Materials
In March 2026, tensions in the Middle East escalated again, with the United States, in conjunction with Israel, launching a large-scale military strike against Iran. Iran retaliated strongly and completely blocked the Strait of Hormuz. This regional conflict quickly triggered severe turbulence in the global energy market, with international oil prices experiencing an epic surge.
This surge then spread to multiple downstream industries, with the tire industry bearing the brunt of the cost increases. The rise in oil prices directly led to higher prices for many core raw materials needed for tire production, while transportation costs also increased, posing new challenges to the already profit-driven tire industry.
Tire manufacturing is a typical resource-intensive industry, with raw material costs typically accounting for about 70% of total production costs. Many key materials are highly correlated with oil prices, and fluctuations in oil prices often directly determine their cost structure. Synthetic rubber, as one of the main raw materials for tire production, relies on upstream raw materials such as butadiene for crude oil refining.
Therefore, the rise in oil prices quickly impacted the synthetic rubber production process. As of March 3, 2026, the closing price of the main SC crude oil futures contract in China was 572.3 yuan/barrel, a significant increase from 498.2 yuan/barrel on March 1, representing a rise of over 14% in just two trading days. Driven by this, the price of synthetic rubber also rose significantly, leading to a corresponding increase in raw material procurement costs for tire manufacturers.
Besides synthetic rubber, raw materials such as carbon black and rubber additives were also affected by the transmission of rising oil prices. Carbon black, as an important reinforcing filler material for tires, has a closely linked relationship with the price of its raw material, coal tar. Higher oil prices have driven up the overall price of coal chemical products, thus increasing the manufacturing cost of carbon black.
Meanwhile, Iran is a major global exporter of methanol, and Israel is a significant supplier of specialty chemicals such as bromine. The current conflict directly threatens the stability of the supply chains for these products, leading to a tightening of the supply of key raw materials such as rubber additives and antioxidants, further exacerbating the upward pressure on the prices of chemical raw materials.
Even more challenging is the simultaneous increase in raw material transportation costs, which further increases the overall cost burden on tire manufacturers. The Strait of Hormuz handles 20% to 30% of global seaborne oil exports. Following its blockade by Iran, international shipping giants such as Maersk and MSC have suspended operations on related routes.
The remaining routes have been forced to detour around the Cape of Good Hope in Africa, adding approximately 15 days to the journey and causing a significant surge in freight costs and war risk premiums. Many raw materials needed for tire production, whether natural rubber from Southeast Asia or chemical raw materials from the Middle East and Europe, are highly dependent on the global maritime shipping system. The disruption of routes and rising freight rates have directly increased companies' procurement and logistics costs.
For China's tire industry, the pressure is even more pronounced. As the world's largest tire producer and exporter, China exports over 70 million tires of various types to the Middle East in 2025. The blockade of the Strait of Hormuz not only nearly severed export channels to the Middle Eastern market and caused a sharp increase in transportation costs, but also significantly increased the risk of delivery delays.
Coupled with the domestic tire industry already facing a "volume increase and price decrease" dilemma, by the end of 2025, the production cost of a typical passenger car tire will be close to the ex-factory price, with the industry's average profit margin less than 15%. The profit margins of tire companies have been further squeezed by rising raw material and logistics costs, with some small and medium-sized enterprises already facing survival pressures.
Currently, international organizations are warning that if the Strait of Hormuz is blocked for more than a week, the global daily oil supply gap will reach 14-18 million barrels, and Brent crude oil prices are expected to exceed $120 per barrel.
At that time, tire raw material and transportation costs will further increase. Tire companies are taking measures such as adjusting production formulas and optimizing procurement channels to cope with cost pressures, but these measures are unlikely to completely offset the impact of rising oil prices in the short term.
This energy shock triggered by the Middle East conflict is being transmitted through the industrial chain, testing the resilience of the global tire industry and accelerating the industry's transformation towards energy conservation, low carbon emissions, and low costs.
