Tire Raw Materials Price Trend
According to data provided by a news agency as of November 6th, the four core raw materials for tire manufacturing showed a "rising but stable" trend:
Natural Rubber: The spot price of Thai 20# mixed standard rubber in Shandong was reported at 14,580 yuan/ton, up 1.39% from the previous day. Although it has fallen 18.3% from the 7-year high of 17,855 yuan/ton at the beginning of the year, it is still up more than 55% cumulatively compared to the first quarter of 2023.
Synthetic Rubber: In North China, styrene-butadiene rubber (Qilu 1502E) and butadiene rubber (Qilu BR9000) were reported at 10,700 yuan/ton and 10,300 yuan/ton respectively, a slight increase of 0.94% and 0.98% month-on-month, but both have fallen by more than 16% since the beginning of the year.
Carbon Black: The price of N660 carbon black in Shandong remained stable at 5600 yuan/ton, up 600-800 yuan/ton from Cabot's price adjustment in October, with the year-to-date decline narrowing to 16.05%.
Steel Cord: Upstream ordinary steel wire rod prices decreased by 2.12% month-on-month, but the cumulative increase in auxiliary material costs still increased the raw material cost per 12R22.5 tire by approximately 55 yuan.
The raw material cost index for all-steel tires was 11860.41 on the day, up 0.82% month-on-month, indicating short-term upward pressure on costs.
Price Drivers: A Triple Resonance of Supply and Demand, Policy, and Capital
1. Supply Side: Dual Constraints of Climate and Structure
Natural rubber supply faces a rigid shortage: Southeast Asian producing regions experienced the rainy season and extreme heat in August, hindering tapping and leading to a sharp reduction in high-quality rubber sources. This, coupled with the aging of rubber trees in southern Thailand, limited the release of new production capacity. Domestically, Yunnan's rubber tapping season will end in early December. Although domestic production accounts for only 6% of global output, market sentiment is exacerbating expectations of tight supply.
Carbon black is affected by tightening environmental policies, leading to temporary shutdowns at some companies. Industry capacity utilization is only 50%-80%, coupled with fluctuations in raw material coal tar prices, supporting high carbon black prices.
2. Demand Side: Resilience and Weakness Coexist
Demand for all-steel tires benefited from the recovery of the domestic heavy truck market and export growth driven by the "Belt and Road" initiative. From January to July, tire production increased slightly by 0.7% year-on-year, with company inventories declining accordingly, indicating good end-user absorption. However, with the off-season in northern China, market shipments have weakened, and companies are mainly focused on digesting existing inventory. Semi-steel tire inventory remains as high as 45.05 days, with weak demand constraining cost transmission efficiency.
3. Capital and Policy: Liquidity and Industrial Upgrading Fuel the Trend
In the global interest rate cut cycle, rubber futures have become a safe-haven asset, amplifying price volatility. Meanwhile, the widespread adoption of radial tire technology has led to a decrease in the recycling of waste butyl inner tubes, resulting in a supply disruption of butyl reclaimed rubber and driving up the price of butyl inner tubes by 15%-20% this year, creating a price singularity in this niche market.
Cost Transmission Effect: The Game Between Industry Price Hikes and Implementation Obstacles
Raw materials account for over 70% of tire production costs, and cost pressures have already triggered industry-wide price adjustments: On November 7th, Linglong Tire announced a 2%-3% price increase for PCR and TBR products starting in December, its third price adjustment this year. Nearly 60 other companies, including Wanli and Dunlop, followed suit, with increases concentrated between 2%-4%.
However, the implementation of these price increases faces real obstacles: the northern market is entering its off-season, dealers are cautious about restocking, and some companies have been forced to withdraw 1-2% of their promotional policies instead of directly raising prices, indicating increased price sensitivity at the end-user level.
Cost transmission exhibits a characteristic of "strong transmission by large enterprises and weak absorption by small and medium-sized enterprises," with some small and medium-sized enterprises forced to exit the market due to insufficient technological upgrades and raw material procurement capabilities. In the short term, a small restocking peak may occur in mid-November, but the prices of natural and synthetic rubber have already fallen significantly since the beginning of the year.
The cost of raw materials per tire decreased by 0.69% quarter-on-quarter in the fourth quarter, and cost pressures are expected to gradually ease. Longzhong Information predicts that companies will focus on stabilizing prices in the short term, and price increases will only materialize after demand recovers.
In the medium to long term, the lack of supply elasticity due to aging rubber trees will support the price center. Key factors to watch include the renewal of planting areas in Southeast Asia, the continuity of domestic heavy-duty truck replacement policies, and the impact of the EU's EUDR regulations on exports. Cross-commodity arbitrage opportunities are emerging, and the price difference between RU and NR contracts may narrow seasonally in the first quarter of next year.
