Tire Industry Cost Crisis
On January 29, 2026, the domestic tire industry was facing a concentrated impact from rising raw material prices. The prices of the two core raw materials, natural rubber and synthetic rubber, continued to climb, posing a severe challenge to the cost control efforts of downstream tire companies and further squeezing the industry's profit margins.
According to market data from the Shanghai Futures Exchange on that day, as of the close of trading on January 29, the price of natural rubber futures (6 contracts) was 16,575 yuan/ton, an increase of 355 yuan/ton from 16,220 yuan/ton on January 23, showing a significant short-term increase, the price of synthetic rubber futures (main contract) was 13,390 yuan/ton, an increase of 460 yuan/ton from 12,930 yuan/ton on January 23, showing a rapid upward trend. The combined effect of rising raw material prices has plunged tire companies into a cost control dilemma.
The rise in natural rubber prices is mainly due to the combined effects of seasonal supply reductions and demand-side stockpiling. According to industry monitoring, major natural rubber producing regions worldwide, such as Thailand and Vietnam, are gradually entering the final stages of rubber tapping.
Rubber trees in northern Thailand have already begun to shed their leaves, and tapping in the northeast is expected to continue until early February.
Factories are experiencing a significant reduction in daily rubber intake, leading to a gradual decrease in market supply. Meanwhile, in Vietnam, seasonal factors have resulted in a sharp drop in latex production compared to the peak season, prompting rubber processing plants to enter a stockpiling phase with high purchasing activity, further pushing up raw material prices.
Furthermore, with the Spring Festival approaching in China, downstream tire companies are releasing inventory to ensure post-holiday production. Under this supply-demand imbalance, natural rubber prices are more likely to rise than fall.
The rise in synthetic rubber prices is mainly due to the dual pressures of supply contraction and cost transmission. Recently, high-cis-butadiene rubber (HBR) plants such as Maoming Petrochemical and Dushanzi Petrochemical have remained shut down, and some private plants in Shandong have switched production or reduced operating rates, leading to a decline in domestic synthetic rubber capacity utilization.
As of January 22, the weekly capacity utilization rate of China's high-cis-butadiene rubber industry fell to 76.12%, a decrease of 3.56% week-on-week, indicating a tight market supply. Meanwhile, rising upstream raw material prices have continued to impact the synthetic rubber industry chain. Since January, international crude oil prices have fluctuated upwards, with the main crude oil futures contract closing at 472.5 yuan/barrel on January 29th, an increase of 30.6 yuan/barrel compared to January 23rd.
This has driven up the prices of petrochemical raw materials such as butadiene, further increasing the production cost of synthetic rubber and pushing its price up continuously.
Natural rubber and synthetic rubber, as core raw materials for tire production, account for more than 60% of tire production costs combined, with natural rubber alone accounting for 40%. The continuous rise in raw material prices has directly led to a significant increase in the unit production cost for tire companies.
Based on the current rate of increase, the prices of both natural and synthetic rubber have increased by more than 5% cumulatively since mid-January, resulting in an increase of more than 3% in the unit production cost for tire companies.
Currently, the tire industry faces fierce market competition, and the prices of end products are unable to keep pace with the price increases. Most companies can only absorb part of the cost pressure themselves, leading to a continuous compression of profit margins.
For small and medium-sized tire companies, the cost pressure is particularly pronounced. Due to weak financial strength and insufficient bargaining power over raw material prices, these companies struggle to lock in raw material prices through long-term supply agreements.
Facing rising price pressures, cost control becomes even more difficult, with some companies even facing the risk of production cuts or shutdowns. Furthermore, the drastic fluctuations in raw material prices increase the difficulty of inventory management. Excessive inventory can lead to further cost increases, while insufficient inventory can affect production schedules, putting companies in a dilemma.
Faced with rising raw material price pressures, domestic tire companies are actively taking various measures to cope. Some large companies are optimizing their raw material procurement models, locking in some raw material prices and reducing the risk of price fluctuations by signing long-term supply agreements and making bulk purchases at opportune times.
Other companies are increasing investment in technological research and development, optimizing tire production formulas, and reducing the use of natural and synthetic rubber while ensuring product quality, thus alleviating cost pressures. However, overall, the high level of raw material prices is unlikely to change in the short term, and the effectiveness of companies' responses remains constrained by the industry environment.
Industry analysts indicate that in the short term, natural rubber prices will remain high due to reduced production in major producing areas and stockpiling demand, while synthetic rubber prices will remain high due to supply contraction and cost support.
The cost control pressure on tire companies will be difficult to alleviate in the short term. In the future, tire companies need to further strengthen supply chain management, enhance their bargaining power for raw materials, and accelerate technological upgrades and product structure optimization in order to better cope with the challenges brought about by raw material price fluctuations and achieve stable industry development.
