With processing plants holding up to six months of inventory and tire industry demand contracting, growers are left with up to 5,000 metric tons of unsold cup lump  

By Camila Gusmão | English translation by Heiko Rossmann

The rapid influx of imported tires into the Brazilian market has brought natural rubber sales to a halt, leaving approximately 5,000 metric tons of cup lump stranded on farms with no immediate buyers. With processing plants at full storage capacity, raw material purchases have been suspended across the country’s main producing regions. At the same time, tire manufacturers operating in Brazil have reduced demand amid slower production and weaker sales.

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Processing plants reach maximum storage capacity

The downturn is hitting the natural rubber sector at the end of the harvest season, threatening the financial viability of growers and tappers. The impasse stems from a sharp loss of market share by domestic tire manufacturers, which absorb roughly 80% of the natural rubber produced in the country, as foreign competitors gain ground in the replacement market.

According to Celso Aparecido Resende de Carvalho, president of the União Cooperativa de Produtores de Borracha Ltda (Unihevea), the suspension of purchases by processing plants stems from operational and financial constraints. “Most processing plants stopped buying rubber around July 20 because they lacked the physical space to accommodate the remainder of the crop and because of the amount of capital tied up in inventory,” he explained. Carvalho added that unseasonal rainfall in June extended latex production into August, resulting in additional production that had not been anticipated for the period.

The imbalance was exacerbated by tire manufacturers, which reduced the volume of incoming deliveries following lower-than-projected sales. “The expectation was to keep producing and gradually move the output, but the flow came to a standstill. The shutdown, initially expected to last about ten days as part of the usual inventory reduction process, is still ongoing,” the Unihevea president said. According to Carvalho, there have been reports of deliveries scheduled for October and November being canceled, with no defined timeline for resuming purchases.

Inventories Reach Six Months

Raw material inventories have reached alarming levels at processing plants in northwestern São Paulo State. Adiel Carvalho, a director at Braslátex, confirmed that processing plants are carrying extremely high inventories of cup lump. “The surge in imported tires is impacting the entire natural rubber supply chain. Today, we have roughly six months’ worth of inventory at the plant,” he said.

The situation is being monitored by the São Paulo State Association of Rubber Producers and Processors (Apabor), headquartered in São José do Rio Preto. According to executive director Fábio Tonus, some plants began refusing to accept new deliveries near the end of the harvest. “Another impact is being felt in payment terms. While tappers continue to be paid within seven days, payment terms for growers have already begun to lengthen as a result of the situation,” he said.

The temporary suspension of tapping during the off-season provides some short-term relief on the supply side, but the sector is focused on the resumption of activities scheduled for October. “We need to know whether, by then, processing plants will have managed to clear their inventories and resume normal intake,” Tonus said. The executive warned that if commercial flows are not restored, growers will enter the new cycle under severe cash constraints.

Imports Dominate Replacement Market

The structural crisis reflects a shift in the Brazilian replacement tire market, currently dominated by Asian products. Industry groups point out that tire manufacturers operating in Brazil, which historically supplied 70% of the replacement market, have seen their share shrink to 30%. In addition, higher tariffs on Brazilian products in the United States have hurt tire exports from Brazil, further reducing domestic consumption of natural rubber.

In response to the imbalance, representatives of tappers, growers, processing plants, and tire manufacturers have been pressing the federal government for measures since January 2025. “Among other measures, we have been calling for a review of import tariffs, anti-dumping measures, and the establishment of quotas for tire imports,” Tonus said. The proposals aim to ensure a level competitive playing field in the domestic market without blocking imports outright.

The National Tire Industry Association (Anip) emphasizes that the surge in imports has affected the manufacturing sector since 2019, resulting in collective vacations, production stoppages, and layoffs. Anip’s executive president, Rodrigo Navarro, stressed that imported tires enter the country fully finished, requiring no locally sourced rubber, steel, chemicals, services, or labor. “Imported products arrive at prices so low that, in some cases, buying them becomes more attractive than retreading a commercial vehicle tire,” he explained.

Industry Calls for Tariff Balance

The manufacturing sector also criticizes the asymmetry in tax treatment between raw materials and finished goods. While imported natural rubber had its import tariff temporarily raised to protect domestic production, finished tires received no corresponding tariff adjustment. “We are not opposed to tire imports. What we are calling for is for everyone in the market, whether importers or manufacturers, to play by the same rules,” Navarro said, highlighting the need for equal regulatory treatment when it comes to compliance with environmental and reverse logistics requirements.

During the off-season in August and September, the market will monitor the pace at which inventories are cleared at processing plants, as well as the progress of trade safeguard negotiations with the federal government. The potential adoption of quotas or anti-dumping duties could prove decisive in determining whether the natural rubber sector resumes normal sales in October or begins the new harvest in an even more critical situation.

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