In 2025, China’s tire industry has experienced a period of high costs. The prices of raw materials such as natural rubber and synthetic rubber have increased in turn. Enterprises have been overwhelmed by the cost of raw materials. Many manufacturers have fallen into the difficult situation of “the more they sell, the more they lose, and they increase revenue without increasing profits.”
After a whole year of pressure and suffering, in the first quarter of 2026, the industry finally ushered in the spring of profitability.
The prices of raw materials have collectively fallen year-on-year, the profits of listed companies have significantly recovered, and the sales of leading companies have grown steadily. The entire industry has swept away the past depression and is ushering in a recovery.
Review of the first quarter:
Cost fall and profit restoration
Raw materials: According to the first quarter comparative data of Longzhong Information from 2025 to 2026, the main raw materials of tires have generally fallen year-on-year, becoming the core confidence for profit restoration.
Raw materials account for more than 70% of tire production costs, and core rubber, carbon black, and additives have collectively declined, directly opening up corporate profit margins.
Costs were stable in the first two months of the first quarter. Only in March, affected by the conflict in the Middle East, crude oil drove synthetic rubber and additives to rebound slightly, which did not change the overall downward cost trend.
Tire companies raise prices: Since March, cost-side pressure has begun to appear, and the industry has successively launched price increases to respond.
Leading companies such as Zhongce, Sailun, Linglong, and Zhengxin were the first to issue price adjustment notices. In the first quarter, the entire industry issued more than 80 price increase letters. The mainstream price increases for all-steel tires and semi-steel tires were 2% to 5%, and some special tires were close to 10%.
Although most of the price adjustments in the first quarter were implemented in the middle to late period and had limited contribution to the profit for the entire quarter, this move effectively stabilized the channel price system, avoided disorderly low-price competition, and safeguarded the bottom line of gross profit for the industry as a whole.
Listed companies: The first quarter reports of many listed tire companies confirmed their profit recovery.
The tire industry as a whole shows three major characteristics: cost is the core engine, raw materials have fallen year-on-year, and gross profits have increased. Some companies have reduced prices slightly in exchange for sales, and top sales have grown steadily; the top effect has been strengthened, with Zhongce, Sailun and others relying on large-scale procurement and global layout to achieve better cost control and shipments; differentiation exists objectively, and individual companies’ net profits fluctuate year-on-year, mainly affected by non-industry common factors such as exchange rates, which does not change the overall recovery trend.
Macro environment: The domestic replacement market is steadily recovering, and the supporting end is recovering steadily along with automobile production and sales; pressures such as EU anti-dumping and geopolitical conflicts will gradually emerge after March, and the overall impact in the first quarter will be limited.
The industry is in a friendly combination period of cost decline + demand recovery, and there is solid support for profit recovery.
Second quarter outlook:
Cost rebound, industry remains stable and under pressure
Raw materials: Since March, conflicts in the Middle East have escalated, and crude oil prices have risen sharply, driving up the costs of synthetic rubber, rubber additives, etc. rapidly.
The average raw material cost index for semi-steel tires in April was 15072.5, an increase of 15% from January; the average raw material cost index for all-steel tires in April was 13633.57, an increase of 9.4% from January.
Price increases are not transmitted smoothly and profit margins are compressed: Faced with the rapid rise in costs, tire companies continued to increase ex-factory prices in April and May, but the extent of price adjustments was far less than the increase in raw materials, showing a pattern of “passive supplementary increases and poor transmission”.
Although the industry is actively raising prices to cover costs, the recovery of terminal demand is slow, pre-promotion overdraft orders, and channel acceptance are limited. Price increases are difficult to fully transmit to downstream, and overall gross profits are likely to continue to be squeezed.
Market and Production Capacity: The second quarter plays a special role in the tire production and sales cycle.
Undertake orders for the first quarter, prepare for the peak season in the second half of the year, and determine the annual sales base; raw material prices, export policies, and channel inventories are concentrated at this stage, affecting the overall profit expectations of the industry; from April to May, many companies arranged installation maintenance, the production pace slowed down, and the supply side actively contracted.
At the same time, on the demand side, the recovery pace of the domestic market is slow, and new orders have shrunk in April; on the export side, EU anti-dumping continues, shipping and geopolitical risks have increased, and both domestic and foreign sales are under pressure.
Taken together, the industry in the second quarter may not be able to achieve the high growth in the first quarter, and is likely to operate stably and weakly. Costs and demand will be squeezed in both directions. The industry as a whole will focus on stabilizing prices, destocking, and controlling loads.
Full-year outlook:
Many disturbing factors
The industry shifts to high quality
The core influencing factors of industry disruption include geopolitical conflicts and crude oil. The situation in the Middle East directly affects crude oil, which in turn affects the prices of synthetic rubber, carbon black, and additives. It is the biggest uncertainty throughout the year; natural rubber supply, Southeast Asian weather, rubber tapping progress,
The inventory cycle determines the bottom support for rubber prices; the international trade environment, EU anti-dumping, tariffs, and non-tariff barriers restrict export growth; domestic demand, automobile production and sales, logistics recovery, and replacement cycles determine the resilience of domestic demand; production capacity and competition, the industry has sufficient production capacity, and competition shifts from price to brand, technology, and globalization.
For the Chinese tire industry, cost fluctuations are still the core variable affecting the profitability of the tire industry. Raw materials account for a relatively high proportion of the total cost, and the price cycle has a significant impact on the overall efficiency of the industry.
In the rising cost cycle, the space for pure price competition has further narrowed, and the impact of product structure and added value on the profitability resilience of the industry has become more prominent.
Judging from the current market performance, the match between the pace of product price adjustments and the endurance of terminal demand is directly related to price transmission efficiency and channel stability.
The complexity of the international trade and geopolitical environment is increasing the potential risks of single market concentration. Globalization and market diversification have become important directions for the industry to respond to external fluctuations.
As the pressure on the industry gradually increases, the importance of cash flow security and operational stability to the sustainable development of the industry has become more prominent.
From a long-term perspective, fluctuations in raw materials are a cyclical phenomenon in the industry. Technology research and development capabilities, brand influence and global operation levels are the keys to supporting the industry to transcend cycles and achieve high-quality development.
The first quarter of 2026 is a period of warm rest for the tire industry, with cost reductions and moderate price increases leading to comprehensive profit recovery; the second quarter and the whole year are a period of stress testing, with triple challenges of geography, cost, and export coexisting.
The industry will not go down unilaterally, nor will it surge all the way. It will show a pattern of shock repair, structural optimization, and the strong will always be strong.
From an industry perspective, profit recovery in the first quarter provided a buffer and support for full-year development, while fluctuations in the second quarter and subsequent periods will further test the industry’s understanding of cycles and ability to control risks.
In 2026, a year of intertwined opportunities and pressures, China’s tire industry is gradually moving from scale expansion to a more stable, sustainable and high-quality development path.
