Latest notice, 10% increase
On January 10, 2025, Qingdao Sentury Tire Co., Ltd. issued a notice on the adjustment of domestic market prices. According to the data, due to the sharp rise in raw material prices, the manufacturing cost of the company's tire products has increased significantly. In order to ensure the provision of high-quality products and services to the market, the company decided to increase the company's product prices by 3%-10% from February 1, 2025.
Let's take a closer look at how the raw material prices will go.
01 Rubber prices plummeted at the beginning of the year
In less than a month, the price of natural rubber fell by nearly 10%. It fell from 18,800 yuan per ton on December 9 to 17,000 yuan per ton. On January 13, 2025, the price of rubber was 17,080 yuan per ton. Although this price is not too low, it has fallen a lot compared to the price at the end of 2024.
02 Indonesia's export of rubber fell
In 2024, Indonesia's exports of natural rubber (excluding compound rubber) totaled 1.62 million tons, a year-on-year decrease of 8%. Among them, the total export of standard rubber was 1.582 million tons, down 8% year-on-year; the export of smoked rubber was 40,000 tons, up 8% year-on-year; the export of latex was 9,000 tons, down 72% year-on-year.
From January to December, the total export of natural rubber to China was 171,000 tons, down 21% year-on-year; the total export of mixed rubber to China was 22,000 tons, up 31% year-on-year. In 2024, the total export volume of natural rubber in Côte d'Ivoire was 1.51 million tons, down 7.7% from 1.63 million tons in the same period of 2023. The import volume of natural rubber will also further affect the price of natural rubber.
03 Raw material prices affect tire prices
Tires are composed of natural rubber, synthetic rubber, carbon black, steel and a variety of chemical raw materials. Among them, natural rubber accounts for 28%, synthetic rubber accounts for 26%, and steel accounts for 9%.
These three raw materials account for as much as 63%. Chemical raw materials account for 14%, including carbon black. Therefore, the cost of tire raw materials is the first factor affecting the cost of tire manufacturing.
So as the price of natural rubber falls further, will the price of tires also fall?
04 Tire profits are as thin as cicada wings
When tires exceed the load index, their structure will be destroyed when driving at high speed; the same is true for tire companies. When costs exceed the red line, the increase in sales will give tire companies a fatal blow.
In the third quarter of 2024, many listed tire companies saw an increase in sales, but no or even a decrease in profits. At least three tire companies saw a year-on-year decline in net profit in the third quarter of more than 30%.
According to the operating data released by tire companies, it can be seen that rising costs have the greatest impact on profits. In the second half of 2024, except for carbon black, the prices of almost every raw material are rising. The year-on-year growth rates of natural rubber and synthetic rubber in the third quarter exceeded 30%.
In addition, the freight boom in some regions in the third quarter was not high, and the import volume of large tires in the overseas market was sluggish, so tire companies dared not raise prices. Costs squeezed on the left, prices squeezed on the right, and thin profits made many tire companies hang on a thread, turning safety into danger!
But this profit situation will soon improve. Why? In 2025, the leading companies began to raise prices sharply!
05 No profit, tire price increase is imminent
A tire company production staff said that due to the increase in production costs, the average tire production cost will increase by about 1 yuan per kilogram. Take the 12R22.5 tire as an example. An ordinary tire weighs about 55 kilograms, so the raw material cost of a 12R22.5 tire has increased by 55 yuan.
The higher the weight of the tire, the higher the raw material cost. The manufacturing cost of an all-steel tire has increased by about 10% on average.
Domestic tire products used to win with price advantages. From the current situation, prices have fixed the development of my country's tire companies. Therefore, breaking the barriers to product homogeneity and removing low-end production capacity can allow China's tire industry to develop healthily and stably in the long term. In such an environment, it is better to boldly increase prices. Even if it is to seek death, give yourself a pain, otherwise you can't survive!
In order to ensure corporate profits, tire prices will not fall, and some foreign-funded enterprises have even issued price increase notices. Tire prices continue to rise, and purchasing is imminent.
