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Tireworld Insight: Highlights of China Tire Rubber Industry in 2013

China Tire Rubber Industry 2013

China's tire and rubber industry demonstrated quite different trajectories in 2013.

While a large portion of tire manufacturers reported record-setting profits, the rubber industry, however, was covered with woes in the year amid the constant fall in natural rubber prices.

The following provides a quick sketch of China' tire and rubber industry in 2013.

 No.1 Tire entitled to automotive warranty services

China’s Standardization Technical Committee issued a notice in January 2013 to collect public opinions on the scope of automotive parts for private use that are entitled with repair, replacement and refund services.

The list comprised 16 consumable items, including tires, bulbs, power batteries, windscreen wipers, spark plugs, and air filters.

The document stipulated that consumers have the option to have their defective automotive consumable parts replaced for free within the quality guarantee period.

It also clearly stated responsibilities on the part of producers, sellers, and repairers for the repair, replacement and refund of private cars manufactured and sold in China.

Market observers believe the move will help promote a cleaner competition environment and the overall sound and sustainable development of the industry.

No.2 “Green” tires much favored by market players

Tire manufacturing enterprises both home and abroad have attached great importance to the development of “Green” tires, or tire products that are environmentally friendly.

The trend has become even more obvious in 2013.

At the first International Tire Industry High-level Round-table Conference held in Guangrao of east China’s Shandong province in May of 2013, associations, chambers of commerce, enterprise executives, and scholars from the tire industry in China, the US, Britain, India, and Thailand reached a consensus, pledging to strengthen exchanges and cooperation especially in fields like resources, energy, technology and talents, promote the development and application of “Green” tires, make breakthroughs in tire recycling and promote constant advancement of the industry and environmental protection causes.

“Green” tires basically refer to radial tires involving new materials and new designs that are more fuel efficient and produce less emission.

No.3 RFID technology employed in tire manufacturing

Kumho Tire is the first enterprise in the world who integrates the radio frequency identification (RFID) system into tire manufacturing.

The tiremaker introduced the new method in June of 2013, a move expected to help save around 10.4 billion South Korean won, or 5.9 million pounds for the company every year.

A RFID tag is a tiny chip embedded on the surface of the inner liner of tires. Microchips are used to store a unique ID for each tire. The chip can also store information about when and where the tire was made, its maximum inflation pressure, and size, etc.

Dealers and consumers of Kumho tires can use the tags for inventory management and logistics at distribution centers, as well as to track a particular tire's individual lifespan and wear.

Market observers note that the new method is very promising and likely to represent a major trend in the future.

No. 4 Spot trading of natural rubber available at BCE

The Bohai Commodity Exchange (BCE) and Rubber Valley jointly inaugurated a spot trading center of natural rubber on July 8, 2013 in Qingdao, Shandong province.

The spot trading center is expected to offer a platform for customers to share resources and offer one-stop service from trading, settlement, storage, delivery, to financing.

Later on November 27, the spot trading of the RSS3 smoke sheet rubber was listed on the BCE, filling the gap of rubber spot trading at the exchange.

The BCE, established in 2009 and based in Tianjin, is a spot trading exchange for nearly 70 commodities including petrochemical products, coal and energy products, agricultural and forestry products, and metals. Its daily trading value tops 20 billion yuan.

No. 5 Tire industry mulls over access threshold

The access rules of the tire industry, the first of its kind in China’s tire making, are currently under draft by the China Rubber Industry Association.

But there’s still no timetable for the finalized version to come out.

Sources familiar with the issue disclosed that the rules will set specific standards on product quality, energy and resource consumption, production capacity and emission control.

Market observers say the new rules will be a double-edged sword for the industry. On one hand, it will help promote the overall advancement of the industry, on the other small and medium-size tire makers will have to face the risk of being phased out during the process.

No. 6 List of first batch of qualified tire retreading firms underway

At the 2013 China Energy-efficient & Low-carbon Development Forum in November, Zhu Jun, head of China Tire Retreading, Repairing & Recycling Association (CTRA), disclosed that the list of the first batch of qualified tire retreading enterprises has been finalized and will be published soon.

The list, comprising only 10 enterprises, is made based on evaluation of a string of factors such as technology, quality, business scale, and environment impact assessment.

Market observers say the upcoming issuance of the list is likely to exert huge impact on the industry given the vast numbers of tire retreading businesses in China.

Currently there are as much as 1,000 tire retreading firms in operation across China.  

No. 7 Chinese tire products put to test of EU tire label rules

The European Union tire labeling regulations went into force on November 1, 2012. The rules have had significant impact on the domestic tire manufacturing sector since the European Union has long been an important export destination, market observers say.

Pursuant to the regulations, manufacturers of tires for cars, light and heavy trucks must specify fuel consumption, wet grip, and noise classification of every tire sold in the EU market starting from November 2012.

The initiative is part of the EU’s Energy Efficient Action Plan, designed to