January 24, 2022

The situation reversed the end of the tire industry

In the first three quarters, China's tires were in a bad situation, sales and export growth slowed sharply, and inventory levels remained high. However, after entering the fourth quarter, especially in November, the production and sales situation of tires improved, the stocks digested quickly, and corporate profits rose sharply.

Industry Forecast The last month of 2012 will be the season for the tire industry. Sales revenue and profits will hit record highs this year. Moreover, the money-making effect has triggered a wave of tire investment mini-climbing, and equipment suppliers have won large orders.

At present, the tire industry is relatively good. First, after September, the United States expired the special tariff on China’s tires for three years, and the cancellation of special tariffs will bring new opportunities for the development of China’s tires.

According to industry insiders, the cancellation of the special bond tax will allow China's semi-steel tires to regain about 30% of the U.S. import market. The corresponding increase in passenger car/light truck tire exports is about 50 million, equivalent to 193 million exports in 2011 in China. 26%. Large enterprises such as Hangzhou Zhongce and South China Tire Co., which have traditionally exported tires for export to the U.S. market, will benefit from this. Hangzhou Zhongcei strives to increase U.S. sales to a pre-tariff level in a relatively short period of time.

Second, the cost of major raw materials for tires has dropped significantly. The price of natural rubber is now around 24,000 yuan/ton, which is relatively low. More than half of the cost of tires comes from rubber, and the drop in rubber prices is absolutely good for tire companies.

Now, the operating rate of tire companies has gradually increased, and the operating rate of tire leading companies has mostly maintained at a relatively high level, and many companies have already produced at full capacity. Shandong Jinyu Company revealed that at present, the company's all-steel tire operating rate is 100%, and the semi-steel tire operating rate is about 90%. Shandong Hengfeng Company has maintained a 100% operating rate since September. The operating rate of Shandong Huasheng Company also increased rapidly, reaching around 90%. The company's sales this year have been very good, basically maintaining full production. Hangzhou Zhongce Tire has a good production and sales of tires, and it is basically at full capacity.

The main driving force for the increase in the operating rate of tire companies is the improvement of sales. The recent domestic tire market is relatively good, especially in China's tire sales are mostly implemented year-end rebate system, dealers to step up procurement at the end of the year in order to complete this year's task, set off a small upsurge in procurement. According to the Double Money Tire Report, tire sales in October increased by 5200% from September, and the company's inventory fell rapidly. The US export market is also improving. South China Tire's October production increased by 12% from September.

The improvement in sales led to a rapid decline in inventory. According to statistics from China Rubber Industry Association Tire Branch, the total inventory of 44 tire companies fell by 1.4% year-on-year, a 3% drop from the previous month, and 2/3 of them had a declining trend. The declining stocks also stimulated tire manufacturers' production enthusiasm, coupled with tire companies catching up at the end of the year, driving production to pick up overall.

"All of the company's tire production lines are currently in full-load production." said Yan Liangguang, general manager of Double Star Qingdao Tire Corporation. Located in Jiaonan City's Double Star Qingdao Tire Corp. processing plant, the production line workers are busy, production equipment is not idle, a busy scene.

The favorable factors from demand and cost contributed to the significant year-on-year increase in profitability of the tire industry. Wind statistics show that in the first three quarters, five of the seven tire companies in Shenzhen and Shanghai achieved a year-on-year growth. Since the price of natural rubber has dropped sharply this year, the average price of Hujiao in the third quarter was around 22,000 yuan/ton, down by nearly 25% year-on-year. In addition, the price of synthetic rubber also dropped successively this year, and the average price in the third quarter dropped by as much as 40.1% year-on-year.

The prices of main raw materials for tires have fallen sharply, but tire sales are now down by about 10%, making tires generate high profits in the face of sluggish demand and poor volume. Therefore, in the first three quarters of the year, when the company's output fell, the net profit increased by 173% year-on-year; double-crop production increased by 6.1% year-on-year, while net profit increased by as much as 61% year-on-year.

In the context of a relatively high business climate, companies have the need to expand production. Tire industry upstream equipment suppliers have recently received large orders. The company has won over 300 million yuan in orders from Hangzhou Zhongce and Shandong Wanda. Tianjin Saixiang has received over 100 million yuan in orders from Tianjin International, and Guilin Rubber Machinery has received a large list of engineering tires. These are the tires of the tire market. evidence. In particular, the market for passenger tires and engineering tires has recently announced that more than 20 tire expansion projects are on or under way.

Near the end of the year, the high gross profit of tire sales, domestic demand growth, and the export market are favorable. These factors will jointly promote the tire industry's production and operation to pick up, and the tire industry's 2012 will be successfully concluded.

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