Guotai Haitong Securities Co., Ltd. has released a research report noting that in June, China's cost per tire excluding tax for all-steel tires/semi-steel tires was 926.07/153.99 yuan, respectively, down 1.30%/2.95% month-on-month, indicating a decline in tire production costs.
Concurrently, over 80 tire companies have issued price increase notices since March, with some firms implementing two to three rounds of successive hikes. The European Union's final anti-dumping ruling was announced on July 7 and took effect on July 8, prompting domestic manufacturers to actively circumvent trade barriers by expanding overseas production capacity. The main points from Guotai Haitong Securities are as follows:
Select Tire Firms Continue Price Hikes as Production Costs Ease
Due to the prevalent use of long-term contracts to lock in prices for raw material procurement, the materials used in current production were mostly stockpiled months earlier. With raw material prices rising continuously from March to April, the lagged transmission effect has led to continued price increases in June by companies including Hankook and Dunlop. According to data cited by the Shandong Green and Low-Carbon High-Quality Development Pilot Zone Construction Office from the Economic Daily, over 80 tire companies have issued price hike notices since March, with some implementing two to three consecutive rounds of increases.
In May, prices for some raw materials declined month-on-month, leading to a reduction in tire production costs. Data from SCI99 shows that in June, the manufacturing cost per tire excluding tax for all-steel tires/semi-steel tires in China was 926.07/153.99 yuan, down 1.30%/2.95% from the previous month.
EU Final Anti-Dumping Ruling Issued, Capacity Expansion Abroad Mitigates Trade Barriers
On July 7, the European Commission issued the final anti-dumping ruling on new passenger car and light truck tires imported from China. The anti-dumping duty measures officially took effect on July 8, the day after the announcement, based on the customs declaration date. As there were no provisional measures, the anti-dumping duties are not applied retroactively. Hankook is subject to a 4.3% injury margin rate, Shandong Yongshun Rubber Co., Ltd. and others face a 45.3% rate, and other cooperating companies are subject to a 24.4% rate.
Simultaneously, the European Commission released a pre-disclosure document for the countervailing investigation, announcing that there would be no preliminary ruling or provisional measures in this case. Barring any extension by the Commission, the pre-final ruling disclosure is expected in mid-to-late August, with the final countervailing ruling to be formally issued no later than December 5.
Domestic tire companies are circumventing trade barriers by expanding production capacity overseas. Taking Thailand as an example, abundant raw material resources, skilled labor, and strong tax incentive policies are also key drivers for establishing factories abroad.
Significant Natural Rubber Price Volatility in H1, Some Firms Engage in Futures Hedging
Wind data shows that from January to May, natural rubber futures prices rose from 15,790 yuan per ton to 17,850 yuan per ton, a cumulative increase of approximately 13%. According to ANRPC forecasts, China's natural rubber consumption in 2025 is projected to be 7.008 million tons. Using all-steel tires as an example, each tire consumes about 0.02 tons of natural rubber.
To effectively hedge against raw material price volatility and mitigate its impact on normal operations, companies including Zhongce Rubber Group Co., Ltd., Linglong Tire Co., Ltd., and Sentury Tire have announced the initiation of raw material futures hedging businesses. These futures operations are strictly limited to hedging and risk avoidance for raw materials required for production and are not intended for speculative profit.
Key Risk Factors
Risk of raw material price fluctuations; risk of escalating tariff policies and trade frictions; risk of downstream demand falling short of expectations.