Zhongtai: The 26th year is a turning point for tire companies to accelerate their overseas expansion. In the short term, we should focus on production capacity progress and pay attention to weakening disruptive factors such as raw materials.

Zhongtai Research Report: 26Q1 New Capacity Expected to Reach Full Production, Top Performers Average +30% Performance Elasticity for 26 Years. On the export front, Chinese production/export volume remained steady on a monthly basis, with a year-on-year increase of +1.0%/-3.6% for 25/12 respectively, affected by the double anti-dumping measures in Europe targeting small and medium-sized tire companies. Since January, the tire sector (export chain) has been oversold, with a turnaround in raw material prices (price increase notices issued in early March), shipping costs, and exchange rates, leading to a release of pessimistic sentiments. The theme of overseas expansion in 26 remains unchanged, with the industry focused on the upcoming EU anti-dumping results on March 30, April performance results, as well as breakthroughs in high-end supporting and racing tires. Zhongtai's main points are as follows: Individual stocks: Focus on tracking capacity progress (supply) and reference export order trends. Capacity progress: 26Q1 main new capacity expected to reach full production, with the top performers showing an average +30% performance elasticity for 26 years. Zhongce/Sailun/Qingdao Sentury Tire leading the way with new capacity in 26 (1-2000w units), with Haian Ju Tire expected to see a +224% year-on-year increase in capacity after reaching full production in 28. US delivery orders: For 26/02, in the off-peak season, monthly cumulative year-on-year increase in the number of delivery orders for Sailun/Qingdao Sentury Tire/Linglong in the US was +4%, +109%, and +64%, respectively. Capacity utilization: The operating rates of top performers in the semi-steel category are all around 95%+, with differentiation and room for improvement in full steel and off-road categories. Industry : Focus on imports from Europe and America (demand) while also considering domestic operating rates and inventory levels. Export trends: Chinese production/export volume remained steady on a monthly basis, with a year-on-year increase of +1.0%/-3.6% for 25/12 respectively, affected by the double anti-dumping measures in Europe targeting small and medium-sized tire companies. Semi-steel tires: Domestic operating rate for 26/02 was around 45% (Chinese New Year holiday); growth in independent exports to Europe was +6% year-on-year for 25/12 (China being the largest importer in the EU, accounting for 59%); growth in independent exports to the US was -2% year-on-year for 25/10 (with Thailand and Mexico being the largest US importers, accounting for 39%). Full-steel tires: Domestic operating rate for 26/02 was around 37% (Chinese New Year holiday); growth in independent exports to Europe was +25% year-on-year for 25/12 (China being the largest importer in the EU, accounting for 20%); growth in independent exports to the US was -10% year-on-year for 25/10 (with Thailand and Cambodia being the largest US importers, accounting for 14%). Off-road tires: Domestic mining industry operating rate in 25Q4 was 72% (stable at around 70%); US mining industry operating rate for 26/01 was 84% (stable). Domestic inventory (small and medium-sized tire companies): Semi-steel tires: Inventory days for 26/02 were 44, with a year-on-year increase of +7% (trending towards reducing inventory); full-steel tires: Inventory days for 26/02 were around 48, with a year-on-year increase of +4% (stable). Cost factors: Trade policy >> raw materials >> shipping costs/exchange rates Changes in trade policies: Europe and America: Expected benefits for top tire companies with the introduction of EU anti-dumping measures in 26, with final anti-dumping rulings in 26/03 and 26/06, as well as preliminary rulings in 26/08. Other regions: Eurasian Economic Union, UK, Brazil, and Colombia initiated anti-dumping investigations/tariff increases on Chinese tires, benefiting top players (with overseas production capacity) in capturing market share. Raw materials: As of 26/03/06, the overall tire raw material price index was at the 55th percentile over the past 3 years, mainly due to price increases in natural rubber (81st percentile) and synthetic rubber (57th percentile). Anticipated increase in natural rubber prices from mid to late March combined with the implementation of EU anti-dumping measures or pressure on prices. Synthetic rubber prices are expected to weaken in April (new capacity added in June/market reacts 1-2 months in advance). Shipping costs: Long-term low freight rates on various routes, with no impact from events in the Middle East as of 2026/03/08. Exchange rates: Continued depreciation of the US dollar and stability in the euro, with hedging options available for foreign liabilities; export chain companies have normalized hedging management. Targets In terms of targets, we continue to favor Zhongce Rubber Group (603049.SH)/Sailun Group (601058.SH)/Qingdao Sentury Tire (002984.SZ) for their increased exports of semi-steel and full-steel tires (26Q1 reaching full production) and high-end positioning. Additionally, Haian Rubber Group (001233.SZ)/Sailun's large tire domestic and international capacity expansion contributions show elasticity, while future focus will be on PRINX CHENGSHAN (01809)/Triangle Tyre (601163.SH)/Shandong Linglong Tyre (601966.SH) and other independent tire companies. Risk Factors Fluctuations in raw material prices; slower-than-expected progress in capacity construction; lower-than-expected demand; uncertainties in international trade frictions; inaccuracies or delays in third-party data estimation and updates.