Cathay Pacific Haitong: Tire costs fell in June, EU anti-dumping final ruling came to fruition

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that in June, the cost of all-steel tires and semi-steel tires without tax in China was 926.07/153.99 yuan/bar, respectively, down 1.30%/2.95% from the previous month, and tire costs declined somewhat. Meanwhile, since March, more than 80 tire companies have issued price increase letters, and some companies have raised prices for 2 to 3 rounds in a row. The EU's final anti-dumping ruling was issued on July 7 and came into effect on July 8. Domestic enterprises actively circumvent trade barriers through production capacity going overseas.

Cathay Pacific Haitong's main views are as follows:

Some tire companies continued to increase prices in June, and tire costs declined

Since tire companies mostly use long-term contracts to lock in prices, most of the raw materials used in current production were prepared several months in advance. Prices of raw materials continued to rise from March to April. Lag transmission effects caused Hantai, Dunlop, etc. to continue to raise prices in June. According to the Shandong Green, Low-Carbon, and High-Quality Development Pilot Zone Construction Office quoted data from Economic Daily, more than 80 tire companies have issued price increase letters since March, and some companies have raised prices for 2 to 3 rounds in a row. Prices of some raw materials fell month-on-month in May, and tire costs declined. According to Zhuochuang information, in June, the cost of all-steel tire/semi-steel tire without tax in China's tire manufacturing process was 926.07/153.99 yuan/bar respectively, a decrease of 1.30%/2.95% from the previous month.

EU anti-dumping final ruling issued, production capacity goes overseas to avoid trade barriers

On July 7, the European Commission announced the final anti-dumping ruling on China's new passenger car and light truck tires. The anti-dumping duty measures were officially implemented on the second day of the announcement, on July 8, subject to the import declaration date. As there are no provisional measures, anti-dumping measures are not subject to retroactive taxation. Han Thai applies a damage margin tax rate of 4.3%, Shandong Yongsheng and others apply 45.3%, and other cooperative enterprises apply 24.4%. At the same time, the European Commission also issued a countervailing pre-disclosure document, announcing that there was no preliminary ruling or provisional measures in this case. In the absence of an extension by the European Commission, it is expected that the disclosure before the final ruling will be released in mid-late August, and the final countervailing ruling will be officially released no later than December 5. Domestic tire companies circumvent trade barriers through production capacity; at the same time, taking Thailand as an example, abundant raw material resources, skilled labor, and strong preferential tax policies are also the main driving forces for overseas factories.

Natural rubber prices fluctuated greatly in the first half of the year, and some companies launched raw material futures hedging business

Wind data shows that from January to May, the price of natural rubber futures rose from 15,790 yuan/ton to 17,850 yuan/ton, with a cumulative increase of about 13%. According to ANRPC's forecast, China's consumption of natural rubber in 2025 will be 7.08 million tons. Taking all-steel tires as an example, each all-steel tire consumes about 0.02 tons of natural rubber. In order to effectively avoid the risk of fluctuations in raw material prices and reduce its impact on the normal operation of the company, Zhongce Rubber, Linglong Tire, Mori Kirin, etc. have all announced the launch of raw material futures hedging business. The futures business is limited to the operation of preserving the value and hedging of raw materials required by the company for production, and is not aimed at profit.

Risk Alerts

The risk of fluctuating raw material prices; the risk of escalating tariff policies and trade frictions; downstream demand falls short of expectations.