Will the good days last year continue this year? Following the U.S. "special security case," India recently imposed anti-dumping duties ranging from 24.97% to 88.27% on China's tires, and a number of tires in Shandong Province such as Double Star, Triangle, and Cooper Mountain. The company was affected, and at the beginning of the new year, Shandong Tire once again faced the trade stick.
Benefiting from the prosperity of the Chinese auto market last year, many tire rubber companies in Shandong province have expanded their production capacity. However, in the face of an endless stream of international trade, technical barriers, and high raw material prices, Shandong tire companies are faced with the problem of how to digest after capacity expansion, and there is the worry of inflated “flat tiresâ€.
Automobile market boom tires to expand
In the past 2009, China's auto production and sales exceeded 13.6 million vehicles, a year-on-year increase of nearly 50%. Along with the rolling of the auto market, Shandong, the nation's largest tire province, did not slow down because of the financial crisis and the “special security caseâ€, but instead set off a wave of concentrated expansion of production capacity.
Dongying City's Jinyu Tire Co., Ltd. has an annual production capacity of 10.5 million sets of semi-steel radial tires. Currently, on September 26 last year, on the effective day of the “special protection caseâ€, Shandong Linglong produced 12 million sets of high-performance passenger car radial tires, etc. The five construction projects started and laid the foundation at the same time. The Double Star Group, one of the top five tire giants in China, also launched an annual production of 1 million sets of all-steel radial tires. Even Jiangsu Shengao Chemical Technology Co., Ltd., the largest upstream company in the rubber industry and the country's largest rubber antioxidant company, also expanded its production capacity in Taian and Heze in the province last year. It also deployed the latest antioxidant products in the production plant in Cao County, Heze. . Other old tire companies in Shandong, such as triangular tires and Cooper Chengshan, are also purchasing large-scale equipment and are preparing to expand production.
Similar to the expansion impulse of Shandong tire companies, the tire industry is “opening up†across the country. According to preliminary statistics, after the start of all the projects launched last year, China will add more than 10 million full-load tires to production capacity. The production capacity of steel tires will exceed 90 million, while the production capacity of semi-steel tires will exceed 320 million.
It is understood that there are currently about 600 manufacturers of tires in China. As the largest tire province in the country, there are about 400 tire companies in Shandong Province, accounting for more than 60%, and the top five domestic tire production enterprises (Hangzhou Zhongce and Jiatong Tire, Shanghai Double Money, Shandong Triangle, Shandong Linglong), Shandong has occupied two of them.
Expansion of impulse to see more auto market and infrastructure
The worry about overcapacity in Shandong is not new, but asked why the company chose to expand production. Many Shandong tire companies invariably concentrated their answers on the amount of infrastructure investment and automobile market prosperity since last year.
Chen Yong, Purchasing Director of Cooper Chengshan (Shandong) Tire Co., Ltd., told reporters that Shandong's all-steel tire production capacity is not too small, but the 4 trillion yuan amount of investment put into the market last year greatly stimulated the increase of "Tiegongji" projects. As a result, the demand for trucks and engineering vehicles has greatly increased. “Accordingly, the demand for all-steel tires has also increased significantly. Although we encountered the 'special protection case' last year, we have successfully completed our sales target.â€
Liu Zhiyuan, manager of Jinyu Tire Purchasing Department, which achieved rapid growth in sales in 2009, said that the prosperity of the Chinese auto market last year effectively bridged the external market recession. “The rapid growth of Chinese automobiles, especially passenger vehicles, last year made semi-steel radial tires The demand for water has risen, highlighting the inadequacy of our semi-steel tire production capacity. We expect the Chinese auto market will maintain an annual growth rate of about 30% in the future, so we have made a strategy to expand the production capacity of semi-steel tires."
Xu Xiaohui, director of Shandong Linglong's tire purchase department, said that China’s tires have encountered trade barriers in the United States, Argentina, and India since the beginning of last year. This is due to the weakness of the product’s primary product and brand. “Exquisite expansion is more Technical renovation and product upgrades. According to Xu Xiaohui, the exquisite tire testing ground with a total investment of 1.13 billion yuan last year will end the history of China's lack of large-scale outdoor comprehensive testing grounds for tires.
Whether New Year's Worries Will Be "Indigestion"
The foundation for the start of construction, completion of production, and hidden concerns behind the vigorous expansion of production capacity can not be ignored. The high raw material costs and the endless trade and technical barriers will greatly affect the number of guests sharing tires.
Affected by strong demand, the price of natural rubber, an important raw material for tire production, remained high for more than a year. On the 13th, the natural rubber futures of the Shanghai Futures Exchange closed at 25,560 yuan/ton, while the price of imported natural rubber returned to 2900 yuan. The level of USD/ton has risen significantly. Qu Dong, Purchasing Manager of Quzhou Pirelli Tire Co., Ltd., told reporters that the current price of international crude oil has dropped to about 80 US dollars per barrel, and the price of rubber closely related to it still maintains the price of about 150 US dollars per barrel last year. Tiangang has just heard that production in Indonesia, the main rubber-producing country, will continue to shrink. This year's cost pressures should not be underestimated."
In addition, an endless stream of trade and technical frictions have made the export situation this year not optimistic. Cai Youqi, chief operating officer of Jiangsu Shengao Company, a rubber company just winning the International Trade 337 lawsuit in the US, told reporters that because the international economy is still in recession, Trade and technical frictions such as the similar 337 litigation of China's tire products will continue to appear. For Shandong Tire Enterprises, whose foreign market dependence is as high as 50%, the operating situation is not optimistic.
In the face of internal and external problems in the Shandong tire market this year, Zhang Hongmin, chairman of the Shandong Rubber Industry Association, said that if Shandong tire companies still rely on the old road of export, then this year's days will not be so good.
Zhang Hongmin told the reporter, “The market is nothing more than domestic and foreign markets. In the face of heavy external market barriers, Shandong tire companies should diversify their markets in addition to improving product quality and expand emerging markets in Africa, Eastern Europe, the Middle East, and ASEAN.†Zhang Hongmin said, “In addition, the country’s policy of stimulating automobile growth last year has achieved good results, especially for light trucks and micro-cars to the countryside and for trade-in, resulting in a significant increase in car ownership in the second and third-tier markets. This year, tire companies should also actively adjust the market. From over-reliance on exports to adjust to the domestic market, especially the rural market, otherwise there is anxiety about indigestion."
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