Chaoyang Tires are in short around China

Tire products produced by Chaoyang Tire Co. are currently in short supply in several regional markets around China, especially in Hunan, Hubei, Yunnan, Guizhou, Sichuan, and the Linyi region in Shandong province, with 11.00 and 12.00 all-steel tires facing the severest supply shortage.

The tight supply has triggered serious cross-regional sales among distributors, and consequently shoring up tire prices by some 100 yuan to 200 yuan per unit.

Industry observers said that the current tire production has been noticeable outpaced by the rapidly changing demand from end-users.

But the phenomenon was believed to be normal since mid-August has long been a busy season for tiremakers to deliver products to both domestic and overseas markets; with export volume growing intensively, a shortage of product supply is quite understandable, said a company source with Hangzhou Zhongce Rubber Co.

The source also noted that with the macro economic condition gradually recovering, key infrastructure construction is expected to accelerate in the second half of this year, which could trigger a rebound in market demand for all-steel tires.

Nevertheless, a number of tire makers seem to have their abilities fall short of their wishes, as the mounting tire inventory has seriously affected their liquidity, and consequently the flexibility in fine-tuning product mix and market strategy.

Therefore, with demand still tepid, de-stocking would continue to be the top priority of tire makers in the near term, analysts say.

Since the beginning of August, the operation rate of tire makers’ all-steel tire production lines have been constantly growing, but with a slower clip. Nevertheless, with demand gradually recovering, the rate of all-steel tire makers is likely to grow by at least 10 percent in August.

It is generally expected thatChina’s national economy would bottom out in the third quarter along with the country’s policy incentives to stimulate economic growth.

And the increasingly active infrastructure market could further warm up the demand for all-steel tires, as the current supply shortage has proved. In this sense, in the upcoming traditional peak season for tire consumption -- September to November, the market is likely to see a full recovery of tire demand, which could also constitute a golden opportunity for the all-steel tire segment to grow bigger and stronger.

(Contributed by Olivia, olivia@tireworld.com.cn)