Some Tire Enterprises in Tire Industry Are Faced with Failure Risk

With the imminent implementation of the new regulations, the tire industry's shuffling efforts will be further increased. Some tire companies cannot withstand the impact of the “double reverse” and new standards for compound rubber, and will certainly go out of business.

Since the beginning of 2014, it has been a difficult nightmare for the tire industry. Firstly, the United States conducted a “double counter” investigation on China's sedans and light truck tires. On the last day of last year, the General Administration of Quality Supervision, Inspection and Quarantine, and the National Standards Commission issued the “General Technical Specification for Composite Rubber”. According to the requirements of the new regulations, from July 2015, the Some 97% and 99% natural rubber compounds will be regarded as raw rubber, and each ton of imports will have to pay 1,500 yuan/ton tariff, once again to the tire companies that are in crisis.

An industry insider interviewed by reporters pointed out that with the imminent implementation of the new regulations, the tire industry's reshuffling efforts will be further increased, and some tire companies cannot withstand the impact of the “double reverse” and the new standard of compound rubber, and will surely go out of business. .

Cost uplift

Since last year, the price of domestic natural rubber has dropped continuously, but tire production has not been able to benefit from it. Instead, it has been unable to extricate itself from the quagmire of price war. "This is mainly related to the overcapacity of the industry in recent years. Tire enterprise stocks are generally up to one and a half months to two months of production, which is about 50% higher than the normal value." Wang Kaifu, an analyst with Longzhong Petrochemical Network, said.

On January 21 this year, the U.S. Department of Commerce determined that dumping occurred in China's tire products exported to the United States, and announced the initial rate of taxation. The tax rate for tire companies involved in Shandong Province ranged from 32.5% to 169.28%. "In foreign markets, China's tires are still mainly relying on price advantage to compete, and it will have a huge impact on Shandong's tires and related industries," said Zhang Hongmin, chairman of Shandong Rubber Industry Association.

“On the last day of last year, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and the National Standards Commission issued the “General Technical Specification for Compound Rubber Products”, which once again puts a brake on the tire companies that are in crisis.” Wang Kaifu said, “The new regulatory requirements The rubber content of the composite rubber should not be more than 88% (mass fraction). If the new formula can't be produced and imported according to the '88% raw rubber + 12% non-gel component' new formula, the existing 97% and 99% natural rubber The amount of compound glue will be regarded as raw rubber, with a duty of 1,500 yuan/tonne for each ton of imports.”

Wang Kaifu gave an account to the reporter: If you can't import compound rubber, tire companies can only purchase natural rubber with high tariffs for general trade or import natural rubber for processing trade. In 2014, China imported 1.6 million tons of compound rubber. If the import is based on general trade rubber, the tariff is 1,500 yuan/ton, and the entire industry will increase the cost by 2.4 billion yuan. “The rubber processing plant in Southeast Asia lacks the internal mixer setting. The quality of the compound rubber manufactured with reference to the new standard is very poor, and the difference in the raw rubber content is also large. The carbon black is unevenly distributed. At present, the rubber processing plant in Southeast Asia does not basically have 88% of production. The raw rubber content of the compound adhesive capacity. Therefore, the company can only import rubber as a general trade."

Wang Kaifu believes that as high as 1,500 yuan / ton of tariffs, according to the spot price of 12,000 yuan / ton, the company's production costs will increase 12.5%. According to the estimation of the total cost of natural rubber, which accounts for approximately 40% of the total cost of tires, the increase in the total cost of tires caused by natural rubber imports has reached 5%. The average profit rate of the domestic tire industry from January to April this year was only 3.6%. "The obvious cost increase is a huge impact for the tire industry, which will cause domestic tire companies to lose their competitiveness in the international arena."

New round of shuffle

The reporter learned from the interview that the "double opposition" of the United States has already shown results. At present, the operating rate of passenger tire production enterprises in Shandong Province is generally low, with good companies accounting for around 80%, and some companies operating at less than 60%. According to data from the Department of Commerce of Shandong Province, in 2014, tire exports from Shandong Province were US$8.855 billion, an increase of only 2.7%, which was a decrease of 10.25 percentage points from the 12.95% growth rate in 2013.

According to statistics from Qingdao Customs, in the first quarter of this year, Shandong Port exported 4.777 million tires to the United States, a significant decrease of 44.5% year-on-year, and contributed 88.8% to the reduction in total tire exports at Shandong Port.

In Wang Kaifu’s opinion, responding to foreign trade barriers should take the initiative to invest and build factories abroad. “Shandong Province has four companies that have invested and built factories abroad, using their country’s resources, labor, and market advantages to increase the share of Shandong tires in the international market and seek to break through.” said Zhang Hongmin.

Zhang Hongmin believes that the acquisition and reorganization is an effective way to increase industry concentration and resolve excess production capacity. “The total number of domestic tire companies is more than 500, Shandong has about 300, and annual output is less than half of the 500,000 small tire factories. At present, the characteristics of Shandong tire industry are large but not strong, wide and not refined. In 2013, Bridgestone, one of the world's top tire manufacturers, achieved sales revenue of US$28.6 billion, which is equivalent to 60% of the total tire industry revenue in Shandong. This shows that the industrial concentration of tire industry in our province needs to be improved.” Zhang Hongmin said.

It is worth noting that in November last year, Shandong issued the "Shandong Tire Industry Transformation and Upgrade Implementation Plan." According to the requirements of the program, Shandong will guide the seven leading companies including Delta, Linglong, and Saizhou to benchmark Bridgestone and Michelin. , Through technological upgrades, resource integration, supporting cooperation, mergers and acquisitions and other ways to become stronger and bigger. By 2020, its output will account for more than 65% of the province's total, and the proportion of green tire products will reach more than 60%. It will strive to have two tire companies reach the world's top 10 tire levels.

“In the future, Shandong Province will formulate a tire brand cultivation plan and access conditions for the tire industry, and formulate green tire product support policies and green tire certification methods. In particular, we must establish a regular evaluation system for this implementation plan to effectively promote the tire industry in Shandong to accelerate Transformation and upgrading." Zhang Hongmin said.

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