China’s tire industry is hard to say “optimistic” in 2H’ 2014

After steady increase in 2013, China’s tire industry went through the first half year of 2014 narrowly, but probably face heavy pressure in the second half year in 2014.

Tireworld's editor think that China's tire industry will face three challenges soon.

Firstly, due to sluggish rubber price, China’s tire price also has to step into downturn circle together. 

In the past six months, China’s tire price decreased 20% compared to the same period of 2013, and had showed slowing down trend since May. Statistics in May showed that aggregate price index of China’s sedan tire dealer is 80.83, dropping 3.44% compared to the last month, and index of China’s truck tire dealer monthly down 2.6% tp 71.46.

At the same time, some international tire giants also increased price discount to complete 1H's sales target, which pushes China’s tire price keeping sliding down. It is predicted that China’s tire manufactures would see red on gross profit in the second half year of 2014.

Secondly, China’s tire overcapacity and stockpile would restrain tire price heading up in 2H' 2014. Due to optimistic judgment on China tire market in 2013, many tire manufactures increased investment on capacity expansion, which led to serious tire overcapacity for sluggish market in 2014.

According to statistics from Rubber Machinery Committee of China’s Chemical Industrial Equipment Association, China increased 15 million units of full-steel tire capacity and 100 million units of half-steel tire capacity in 2013.

Meanwhile, according to current tire equipments purchase estimation, China would increase 15 million units of full-steel tire capacity and 150 million units of half-steel tire capacity in 2014, which would lead to no less than 70% of operation rate in China’s most middle and small-size tire manufactures.

Planning to profit from low-swinging rubber price, China’s tire manufactures raised their tire stock since the end of last year. Nowadays, China’s tire stockpile reaches to one and half month's production, 50% higher than normal level.

It is said that the manufactures expect to digest the stockpile in the second half year of 2014, but it looks like impossible from current transportation index, which means tire investment would see in knee point in the near future.

Thirdly, the United Steelworkers filed petitions to the International Trade Commission and Department of Commerce, requesting anti-dumping and countervailing duties against passenger and light truck tires imported from China in June 3.

It is predicted that America government will restart 25-40% of anti-dumping and anti-subsidiaries duties against tires from China from October in 2014. If it works, China’s tire market will face big challenge again.

Editors suggests that China’s manufactures should update production technology and realize green production as soon as possible. Meanwhile, China’s tire producers also should join together to respond the petition, and fight for the best result for themselves. Besides, they should develop more uprising markets and not only aims at price war in America market.