Rubber prices impacted tire profits in January

In early January 2026, the domestic tire industry faced severe challenges under multiple pressures. The simultaneous rise in prices of major raw materials such as natural rubber and synthetic rubber, along with the continued increase in the cost of auxiliary materials such as steel and carbon black, drastically compressed the industry's overall profit margins.

Data shows that the theoretical profit of semi-steel tires has fallen to a low of 0.29 yuan/kg, while all-steel tires have fallen into a loss-making situation, significantly increasing the industry's operational pressure.

This round of raw material price increases was primarily driven by natural rubber. From November 2025 to January 13, 2026, the price of the main natural rubber futures contract climbed from around 14,500 yuan/ton to 16,000 yuan/ton, a cumulative increase of over 1,600 yuan/ton, with a single-week increase exceeding 3% in the first ten days of January alone.

The price increase was mainly due to a tightening supply and demand situation: the aging of global rubber trees is becoming increasingly prominent, limiting long-term production potential; in addition, major producing areas in Southeast Asia have gradually entered their seasonal low-production period since January, with tapping activities in northeastern Thailand and central and northern Vietnam gradually ceasing, resulting in a significant contraction in raw material supply.

Meanwhile, tapping has ceased entirely in Yunnan and Hainan, domestic production areas, and companies' winter stockpiling is lower than in previous years, further exacerbating the tightness in the spot market.

The rapid rise in natural rubber prices has quickly spread to the synthetic rubber sector. As a crucial component of the tire raw material system, natural and synthetic rubber together account for approximately 54% of tire production costs.

Since January, the price of butadiene, a core raw material for synthetic rubber, has surged, with a monthly increase exceeding 12%, rising from 8333.33 yuan/ton at the beginning of the month to 9800 yuan/ton, pushing the spot price of butadiene rubber to the 11500-12200 yuan/ton range. 

Coupled with rising prices of auxiliary materials such as steel and carbon black, as well as continuously increasing labor costs, tire production costs are showing a rapid upward trend. Natural rubber, synthetic rubber, and steel alone account for 63% of the total tire cost.

Against this backdrop of rapidly rising costs, tire companies are struggling to effectively pass on the pressure to the product end, resulting in a double squeeze on profit margins. As of early January, the theoretical profit of semi-steel tires decreased by 0.07 yuan/kg month-on-month, while the theoretical profit of all-steel tires had fallen into negative territory.

The main reason for this phenomenon is the contradiction between overcapacity and high inventory levels in the industry. In 2026, the total domestic production capacity of semi-steel tires is expected to exceed 800 million units, while actual demand is less than 600 million units, and the overall industry operating rate has long been below 70%. 

As of January 15, the inventory turnover days of sample semi-steel tire companies reached 47.92 days, and that of all-steel tires was 46.1 days, both at historically high levels. To promote cash flow and reduce inventory, distributors generally refused to accept price increases, forcing tire companies to offer discounts of 5%-8% to promote sales, creating a reverse cycle of "rising raw material costs and falling product costs."

Industry differentiation has become increasingly prominent in this round of shocks. Leading companies have mitigated risks through global expansion and technological innovation. Companies such as Sailun and Linglong have built production bases in Southeast Asia and the Americas, effectively circumventing trade barriers, and actively investing in the research and development of high-end products such as tires for new energy vehicles, enhancing their market competitiveness.

In contrast, small and medium-sized enterprises (SMEs) lacking technological accumulation and channel advantages are trapped in a price war, with some companies' gross profit margins falling below 10%, and some small factories even planning to shut down prematurely. Looking at operating rates, in early January, the operating rate for semi-steel tires was 74.35%, and for all-steel tires it was 62.84%.

Although slightly higher than the previous month, these figures remain lower than the same period last year, indicating a generally cautious production strategy among companies.

Looking ahead, natural rubber prices are expected to remain high and fluctuate between 15,800 and 16,500 yuan/ton in the short term. The tire industry's profit recovery still faces significant challenges, requiring a gradual stabilization of raw material prices, a recovery in end-market demand, and effective destocking of industry inventory.