Tire Raw Material Price Impact

1. Tire Raw Material Composition: The Driving Factor in Cost

Tires, as key components of vehicle operation, are composed of a complex and diverse raw material composition, primarily consisting of natural rubber, synthetic rubber, carbon black, steel, and a variety of chemical raw materials. Natural rubber accounts for 28%, synthetic rubber for 26%, and steel for 9%, totaling 63%.

Chemical raw materials account for 14%, with carbon black playing a crucial role in tire manufacturing, providing reinforcement and wear resistance. Therefore, the cost of tire raw materials is undoubtedly the primary factor influencing tire manufacturing costs.

2. Rubber Pricing: Sharp Short-Term Rise Pushes Up Synthetic Rubber Costs

On August 18, 2025, the rubber pricing was fixed at 15,870 yuan per ton. Judging from the overall price trend in the rubber market, this price is not high. However, a comparison of prices since June of this year reveals fluctuations.

For quite some time, rubber prices have remained stable at around 13,000 yuan per ton. Just a few days ago, the price of the main rubber compound was hovering around 14,500 yuan. Unexpectedly, in just a few days, the price surged by 1,300 yuan, a dramatic fluctuation that caught market participants by surprise.

Since synthetic rubber is heavily dependent on the main rubber compound price, the rise in the main rubber compound price inevitably drives up synthetic rubber prices, which will undoubtedly further increase tire manufacturers' costs for rubber raw material procurement.

3. Carbon Black Price Trends: Bottom-out Rebound in Late July, Supply and Demand Key

In addition to natural rubber, the price trend of carbon black, a key additive for tire reinforcement and wear resistance, has also attracted considerable attention. A review of the carbon black market performance since March shows a consistent downward trend.

However, in late July, carbon black prices suddenly took a turn for the worse, entering an upward trend. Prior to July, due to a significant oversupply in the market, many carbon black producers, vying for limited market share, adopted price cuts, driving carbon black prices downward.

However, in late July, production at some carbon black producers declined significantly due to equipment maintenance and insufficient raw material supplies. Meanwhile, demand for carbon black in the downstream tire market did not decrease. Instead, it saw a modest increase with the commissioning of new production lines at some tire companies. This imbalance of decreasing supply and increasing demand has led to a rebound in carbon black prices.

4. Shandong Carbon Black Case Study: Price Increases Outstrip Cost Increases, Pressure on Corporate Profits

Take Shandong as an example. In late July, the price of carbon black N330 (non-tire, acceptance, delivered, tax included) gradually increased from 6,200 yuan/ton at the beginning of the month. As of August 12, the price had climbed to 6,500-6,600 yuan/ton, an average increase of approximately 300 yuan/ton, or 4.8%, compared to late July.

From a cost perspective, the price trend of high-temperature coal tar, the raw material for carbon black, diverged from the market price trend in July and August. As of August 12, the price of high-temperature coal tar in the Shandong market was 3,650 yuan/ton, up 300 yuan/ton from the average price in early July.

This translates to a 500-550 yuan/ton increase in the cost of carbon black N330, yet the market price of carbon black has only increased by around 300 yuan/ton. This indicates that despite the price increase, the profit margins of carbon black manufacturers remain severely squeezed, as the increase is not as large as the cost increase.

5. Carbon Black Market Supply and Demand Outlook: Structural Contradictions Difficult to Ease in the Short Term, Limiting Price Increases

From a supply perspective, although total carbon black supply in July decreased by 45,400 tons compared to June, given the gradual commissioning of new production capacity in 2025 and the limited decline in overall industry operating rates, the current carbon black market faces significant supply pressure.

From the demand side, downstream tire and other product manufacturers are experiencing only minor fluctuations in operating loads for semi-steel and full-steel tires, impacted by factors such as automakers' high-temperature holiday periods and peak periods of high-temperature electricity consumption.

Demand for carbon black is unlikely to see significant growth. Therefore, the structural imbalance between supply and demand in the carbon black market is unlikely to be effectively alleviated in the short term, which means that the potential for price increases will remain limited.

6. Tire Company Response Strategies: Multiple Measures to Reduce the Impact of Cost Fluctuations

Overall, the frequent price fluctuations of natural rubber, synthetic rubber, and carbon black have placed significant cost pressure on tire manufacturers.

Faced with uncertain raw material prices, tire manufacturers need to closely monitor market trends, strengthen cooperation with suppliers, and minimize the impact of raw material cost fluctuations on production and operations by optimizing procurement strategies and exploring new raw material substitution options, thereby enhancing their competitiveness and resilience in a complex market environment.