Profits "Avalanche": Tire Winter Colder Than Expected

On the evening of October 23, Zhongce Rubber released its Q3 report: revenue for the first three quarters was 36.079 billion yuan, a year-on-year increase of 7.11%; net profit attributable to parent company was 2.854 billion yuan, a year-on-year decrease of 18.77%. Among them, net profit for the third quarter alone was only 413 million yuan, plummeting by 65.29%.

One week ago, Linglong Tires' forecast was even more severe: net profit attributable to parents for the first three quarters was only 62 million to 69 million yuan, a year-on-year decline of over 94% -- same period last year it earned 1.023 billion yuan, this year non-recurring profit directly turned into a loss.

Revenue up, profits collapsed, the more tires sold, the less earned; this is already the true reflection of the 2026 tire industry.

Scissors Spread Squeezes Profits

The problem lies entirely in the price spread. Zhongce operating data shows that the composite procurement price of five major raw materials in the third quarter increased by 20.76% year-on-year, while the average selling price of tires increased by only 0.71%. Zhongce still has the mid-to-high-end market supporting it, the low-end market is fiercely competitive, falling into a vicious cycle of falling volume and prices. In September, over a hundred price increase letters were issued, but factories raised by 3-5 percentage points, while only 1 percentage point remained at the terminal, all digested layer by layer by channels -- whoever raises prices significantly first loses customers first.

Natural rubber stood at 20,000 yuan/ton by the end of September, marking the first time since March 2017; early October surged to a near nine-year high of 20,645 yuan/ton; carbon black rose by nearly 60%. Thailand's production cut expectations continued to ferment, and cost pressure in the fourth quarter is more severe than the third quarter.

Encircled from Three Sides, Entire Industry Faces Tribulations

On the export front, EU anti-dumping measures took effect on July 8, with tariffs reaching up to 45.3%; anti-subsidy final rulings will be implemented before December 5; July exports to Europe were directly cut by over 70%. Investigations from the US, Canada, and the Eurasian Economic Union followed one after another.

On the demand front, domestic car sales in September fell by 26% year-on-year, the matching market lost half first; the replacement market was dragged down by infrastructure and freight, dealers dare not stock up.

On the exchange rate front, hidden arrows are even more fatal. Some tire enterprises had exchange rate losses exceeding 1 billion yuan in the first three quarters, directly turning from profit to loss. Michelin was hit similarly -- if calculated with constant exchange rates, actual growth was 1.0%, purely tricked by exchange rates. The difference is, Michelin has a distributed layout in over 60 factories globally, hedging with multiple currencies, while over 90% of Chinese tire enterprises only export from Chinese factories, single exchange rate risks must be fully accepted. According to calculations, a 3% fluctuation in exchange rates can cause a direct 20% impact on profits. Want to learn from foreign capitals building factories globally? Overseas investment starts at 5 billion yuan, small and medium factories simply cannot afford it.

Factory Stoppages, Profit Cleanup Just Starting

Starting from September, 20 tire factories successively issued "suspension for maintenance" notices, some wrote 10 days leave, but actually not restarted after 23 days. In September, rubber tire casing output declined by 3.3% year-on-year, semi-steel tire output fell by 20%. The first week of October, operating rates for full steel tires and semi-steel tires both fell to around 30%, comparable to Spring Festival, rare in nearly 7 years.

"Exchange rates swallowed 90% of profits, rare in nearly 20 years. Next year, who knows if our factory won't exist anymore." Some business owners spoke directly. With the Dalian Tire Factory being seized, industry confidence accelerated collapse.

The Q3 report is just a trailer: high-cost raw materials will only be accounted for in the fourth quarter, the EU anti-subsidy shoe is about to land. Top enterprises still have scale and overseas factories as two trump cards, small and medium factories don't even have trump cards. The tire business in 2026 is the hardest year in the past decade -- this round of profit cleanup has just begun.