Zhuochuang Information: Upstream raw materials are operating at high levels, and profits in the natural rubber industry chain are under pressure

After the Spring Festival, prices of tire base materials generally rose, with synthetic rubber seeing an especially noticeable increase. Natural rubber stayed firm amid tight supply of new rubber and weaker demand expectations. Shifts upward in the price focus of upstream raw materials pushed tire manufacturers’ production costs higher, but cost pressure was not transmitted smoothly to the end market, compressing manufacturers’ processing margins. In the short term, continued upward pressure from raw materials could further expand the scope of theoretical tire processing losses, thereby strengthening companies’ expectations of price increases and prompting them to adjust their raw-material formulations. Based on an analysis of the natural rubber industry value chain, with raw material costs remaining at a high level, profit pressures on both upstream and downstream companies have become prominent, with losses in particular in downstream segments worsening continuously. According to research by Zhuochuang Information, some companies have already gradually shifted to purchasing natural rubber at relatively lower prices to replace synthetic rubber, which will provide some support for demand for natural rubber in the short term. (Zhuochuang Information)