2026 H1 Tire Market: Diverged Supply & Demand, Stable yet Tight

07-15-2026

The Chinese tire industry navigated a complex operating environment in the first half of 2026, shaped by volatile raw material prices, geopolitical risks, trade barriers and China’s domestic policy adjustments. The market presented distinct structural divergence: mounting pressure on passenger car radial (PCR) tires, steady growth in truck and bus radial (TBR) tires, and continuously shrinking industry profit margins, as the sector entered a phase of structural consolidation.

Geopolitical conflicts in early 2026 triggered sharp fluctuations in natural rubber, synthetic rubber, carbon black and other key raw materials, prompting Chinese tire manufacturers to implement two consecutive price adjustments from March to May. Phased price hikes effectively stimulated channel restocking, maintaining relatively active production and sales across the industry. However, external headwinds weighed on overseas shipments: rising ocean freight rates disrupted deliveries to the Middle East, while the EU’s final anti-dumping ruling on Chinese PCR and light truck tires led to a notable decline in related exports to Europe.

China’s domestic demand also underwent structural shifts. The phased reduction of NEV purchase tax incentives and scaled-back vehicle replacement subsidies suppressed passenger vehicle production and sales. Meanwhile, surging fuel and natural gas prices accelerated the substitution toward new energy commercial vehicles, providing structural support for the TBR tire market.

Against this backdrop, the first half of 2026 saw a clear split in performance: PCR tires faced growing production and sales pressure, while TBR tires achieved steady expansion. Nonetheless, elevated raw material costs and sluggish pass-through of finished product prices continued to squeeze overall industry profitability.

Price Trend: Phased Rises Followed by Weakening Upward Momentum

China’s domestic tire prices in H1 2026 remained above levels seen in the second half of 2025, trending upward in phases, stabilizing at high levels, and loosening moderately toward the end of the period.

Key specifications reflected clear pricing dynamics: the average monthly price of the mainstream 205/55R16 PCR tire stood at 195.2 RMB per unit, up 1.28% month-on-month; the average monthly price of 12R22.5 TBR tires reached 844.83 RMB per unit, a mild month-on-month increase of 0.58%.

PCR prices exhibited greater volatility. Cost increases in Q1 drove concentrated price hikes by manufacturers. Entering Q2, softened raw material costs, expanding new capacity, and weak China’s domestic and overseas demand led to slower end-market sales and rising channel inventory. With limited room for further price increases, enterprises shifted to promotional policies to reduce inventory, resulting in stabilized and gradually loosening prices.

For TBR tires, prices remained firm from Q1 through April supported by cost pressures. Weak end-user demand and resistance to price increases emerged in the late second quarter, halting further upward adjustments. Most manufacturers adopted flexible promotions based on inventory and shipment conditions, leaving prices high but lacking upward momentum.

Supply Side: Modest PCR Growth, Stronger TBR Expansion

Production data showed that China’s PCR tire output reached 346 million units in H1 2026, a year-on-year increase of 1.59%, with an average capacity utilization rate of 67.50%, slightly down 0.05 percentage points year-on-year. The PCR segment faced notable operational pressure due to weak downstream demand, lagging cost pass-through, and frequent production controls and maintenance in Q2. Output growth was modest and supported only by newly released capacity.

TBR tire output totaled 74.75 million units, up 3.78% year-on-year, with the average capacity utilization rate rising 3.48 percentage points to 60.88%, significantly outperforming the same period last year. Post-Spring Festival restocking and raw material-driven market sentiment boosted production and sales in March and April. However, pent-up demand faded and purchasing enthusiasm cooled in May and June, increasing operational pressure on manufacturers, though overall operating rates remained improved year-on-year.

Inventory trended moderately upward. By the end of June, the average inventory turnover days for PCR tires stood at 46.35 days, and 40.51 days for TBR tires, both slightly higher month-on-month. PCR inventory levels remained better than historical averages, while TBR inventory turned from a year-on-year decline to a slight increase.

Supply-Demand Balance: Weak PCR, Resilient TBR

PCR Tires

Total supply in H1 reached 349 million units (+1.64% YoY), while total demand amounted to 303 million units (-0.92% YoY), reflecting loose supply and contracting overall demand. OEM demand was dragged down by weak passenger vehicle sales, replacement demand was restrained by conservative consumption and extended replacement cycles in China’s domestic market, and export demand suffered notably from EU trade barriers.

TBR Tires

Total supply hit 74.95 million units (+3.84% YoY), with total demand at 73.45 million units (+2.86% YoY), indicating growth across both supply and demand. Despite temporary disruptions to Middle East exports due to geopolitical tensions, the TBR sector showed strong resilience in China’s domestic replacement demand, NEV-related OEM demand and overall overseas shipments.

H2 2026 Outlook: Heightened Competition, Sustained Margin Pressure

Price performance in the second half is expected to remain under pressure with limited upside. PCR demand is unlikely to improve meaningfully, as weak China’s domestic replacement demand and ample supply cap price increases. High dealer inventory and funding pressure raise risks of discounted clearance, while softer raw material costs weaken cost support, leaving PCR prices vulnerable to downside pressure.

For TBR tires, traditional peak and off-season effects continue to fade. End-user demand remains rigid, and price-cutting to boost sales yields limited results. Prices may edge lower in Q3 and Q4 but within a modest range.

On the demand side, a mild sequential recovery is expected in PCR OEM demand, supported by a potential stabilization in passenger vehicle production and new NEV model launches. Replacement demand in China’s domestic market will see slight seasonal improvement. Exports are projected to edge down slightly amid continued EU anti-dumping measures.

TBR OEM demand will benefit from ongoing policy support for new energy commercial vehicles. China’s domestic replacement demand may soften slightly in Q3 amid fierce competition and enter a traditional off-season in Q4. Exports are expected to resume gradual growth as Middle East shipments recover, supported by cost-effective product positioning.

Overall, production and sales pressure will intensify in the second half of 2026. New capacity continues to come online both in China and globally, while China’s domestic demand growth remains constrained and export competition intensifies under rising global trade barriers.

Enterprises have already stepped up promotions since July, largely eroding price increases implemented in the first half. Amid intensified competition, manufacturers will maintain flexible production controls and customer-friendly pricing to secure market share, keeping industry profitability under continued pressure.