China Tyre Output Growth Slows

China’s tyre industry, now the world’s largest, is tipped to experience slowing growth in the first half of the year as exports begin feeling the affect of a global economic slowdown. This sober outlook was given by the China Rubber Industry Association, which added that profit margins have been eaten away by raw material costs.

Tyre output by the association’s members was reported to have grown 12 per cent in the first half from a year earlier, to about 124 million units. “In the past, we had seen the growth rate at about 18 per cent,” said a senior official, who wished to remain anonymous. The association’s 46 members account for about 70 per cent of China’s tyre production, the official added.

The association has warned that, if rubber prices do not ease, as many as 30 per cent of tyre manufacturers may find themselves in the red by the end of the year. Spot prices of natural rubber increased about 30 per cent during the first half of the year.

“The rising price has forced some small and medium-sized tyre producers out of business,” commented a Shanghai-based trader. Growth in car sales in China – now the world’s second largest vehicle market – is also slowing, with July presenting the lowest annual increase in two years. The slowdown in the automobile industry is likely to affect the tyre industry within a few months, traders and industry officials believe.