Raw Material & Electricity Price Increase Notification

Dear Valued Customers

Due to the global spread of COVID-19, we are all facing a harsh international trade environment since last year.

The swelling freight rates and container shortage have become a global challenge, disrupting supply chains across all industries. Shipping freight rates have sharply increased from the beginning 2019 to August 2021. The cost of raw materials has increased as well since last year. We are facing difficulties in running business due to the profitability declined.

From September this year, China is in the grip of a severe shortage of both coal and electricity as the economy has resumed strong growth after the coronavirus recession but coal mine output has failed to keep up, leaving generators short of fuel. Energy crisis led to many local governments in China began to implement strict “dual control system of energy consumption” policies in September 2021. Additionally, production capacity in some high energy intensity industries may be further restricted. The upstream supply chain of tyre industry was all affected to a certain extent which cause the price increase of these raw materials. Other tyre costs tied to the escalating price of energy - including carbon and other raw materials have also increased.

Raw materials are sharply rising in Q4 compared with Q3, such as Chemical auxiliary rose 30%, Styrene Butadiene Rubber rose 12%, Steel Cord rose 5%, Carbon Black rose 8%(see attached Annex 1).Moreover, Financial dep estimated transformation cost will increase 14% in Q4 (see attached Annex 2) due to the coal price increase 40% compared with Q3.

Except the rising price of Chemical auxiliary, Styrene Butadiene Rubber, Steel Cord, Carbon Black increasing, the price of electricity for industrial users raised 20% from October 15, 2021, based on the latest notice from Electric Power Bureau. All of above issues exacerbate the rise of transformation cost.

Our company has been committed to providing customers with high-quality products and thoughtful service. Prior to this, we have made every effort to mitigate the impacts of issues like dramatically rising cost for raw material and freight. However, in order to survive, maintain the quality of the product, and continue business with you, we have to inform you that we will increase prices in coming months for 2 or 3 rounds.

We value your business and thank you for your continued support of us.

Sincerely,

Haulmax Tire

Annex 1：(Time: 06/01/2021-10/18/2021)

1)Natural Rubber – STR20 price（Dollar/Ton）rose 40%