China has closed down 35 tire companies, and industry consolidation is accelerating!

China has closed down 35 tire companies, and industry consolidation is accelerating!

The second half of 2018 has already started, and this year's Chinese tire industry is destined to be an unsettled year. The polarization of the tire industry from 2016 is entering a climax. In 2003, China’s tire companies on the ground had new factories almost every month, and a large-scale groundbreaking ceremony was released. Tire companies have closed down almost every month. It is understood that 35 tire companies have been bankrupted and liquidated since 2017.
From 2017 to August 1, 2018, 35 tire companies have closed down and bankruptcy liquidation 2 From 2017 to August 1, 2018, 35 tire companies have closed down and bankruptcy liquidation

1. The pattern has been set

According to relevant departments, China’s tire production last year was 926 million, an increase of 5.4% year-on-year, accounting for one-third of the global total. The output of auto tire manufacturers increased by 7.1% year-on-year to 653 million, and radial tire production climbed 8.5% to 613 million - including 131 million truck and bus tires, up 8.2% year-on-year, and 482 million passenger tires. The growth was 8.5%, while the production of bias tires fell by 11.1% to 40 million.

The current tire industry pattern has been set The current tire industry pattern has been set

The current tire business is widely believed to have exceeded the cost of manufacturing in Southeast Asia, South Asia and Eastern Europe due to a number of factors, including unstable raw material prices, overcapacity, rising labor costs and tightening environmental regulations. And more than 90% of the cost of manufacturing in the United States. In 2017, tire company profits fell by 49.6%, while China's total vehicle volume increased by 11% to 310 million, including 23 million trucks. The number of newly registered trucks exceeded 3 million, a record high.

2. The company closed down

The situation is even worse for small tire companies. In 2017 alone, 27 tire companies closed down and went bankrupt. They are all local tire companies in China, especially the industrial clusters from Dongying, Shandong Province, which are still collapsing and spreading, and the total price of bankruptcy auctions involved is about 1.25 billion yuan. Since the countries including India, the European Union, the United States and Turkey have launched anti-dumping and countervailing policies on China's tire exports, the market situation of the Chinese tire market in 2017, the world's largest tire exporting country, has deteriorated extremely.

For example, in August 2017, India determined that there were dumping pneumatic radial tires in China, and since September it has imposed a tariff of US$245 per ton to US$452 per ton. Similarly, the EU began anti-dumping investigations on Chinese passenger car tires in August last year and expanded to countervailing duties in October. This process led to the imposition of extremely high temporary tariffs on Chinese manufacturers, effective from February 2018, after the permanent ruling of the year had not yet been implemented.

In 2017, 27 tire companies went bankrupt and were all local tire companies in China. In 2017, 27 tire companies went bankrupt and were all local tire companies in China.

In September 2017, the United Steelworkers of America applied to revoke the earlier decision to seriously damage China's truck and bus tire exports and restart the tire trade war. Turkey also announced that it will continue to impose a 60% anti-dumping duty on various types of Chinese tires.

3. Overseas investment

The CEOs of Chinese tire companies can always find various countermeasures. Due to the increase in import and export trade friction and labor costs, domestic environmental protection costs have soared. Companies with sufficient resources have established or are building production bases overseas, especially in areas supported by China's “One Belt, One Road” initiative. Including Linglong , Zhongce, Sailun Jinyu, Pulin Chengshan, Wanli, Sen Qilin, Double Star , Double Money, etc. have turned to overseas investment. However, the current mainland China's financial policy is tightening the outflow of the relevant US dollar foreign exchange, so there is also an undercurrent change in the investment climate of overseas.

In addition, we know that the projects being prepared include the 2.1 billion factory in Pulin Chengshan and the 1.7 billion tire factory in Malaysia and the 2.7 billion factory in Guizhou. The triangle has announced that it is planning a new factory in the United States, and Linglong is also pondering the new factory in Europe. In short, tens of billions of overseas investment seems to be breaking through the bondage and going straight to overseas investment and building factories - making tires!

Chinese tire companies have set up factories abroad, one is to respond to the “One Belt, One Road” policy, and the other is to avoid trade friction. Chinese tire companies have set up factories abroad, one is to respond to the “One Belt, One Road” policy, and the other is to avoid trade friction.

4. Technical breakthrough

The tire industry is a very individual industry, and the tire companies in the head are also making every effort to promote technological upgrading. Some companies have made breakthroughs, such as exquisite dandelion rubber tires, Zhongce Rubber's intelligent cloud tire system, Sailong Jinyu's high-performance green tires using EVEC rubber, and all-electromagnetic heating direct vulcanization technology and equipment for triangular tires.

In short, the Chinese tire market is falling out of favor, and the industry's sky is changing dramatically. A large group of tires, including tire companies, tire dealers and tire retailers, are continuing their tire business with anxiety and expectation.

Reading volume: Source: Tire Business Author: Zebian

Oilfiled equipments

Henan Dongfanglong Machine Manufacture Co., Ltd , https://www.eastlongmachine.com