CRIA: Chinese tyre market will be ‘tested’ in 2H 2011

Analysts believe that China’s tyre industry will face a severe test in the second half of this year. According to the China Rubber Industry Association (CRIA) statistics, in the first six months of 2011 member companies’ tyre production totalled 128 million units, of which 107 million were radial tyres. This represents year-on-year growth of 1.6 and 5.3 per cent respectively. Sales revenue reportedly totalled 87 billion yuan, up 19.3 per cent, while export delivery volumes of 54.18 million units (28.2 billion yuan) grew 5.6 per cent and 29.2 per cent respectively. However industry profits of 2.71 billion yuan were said to have been down 5.4 per cent, while inventories rose 31.91 per cent.

While those in Europe (and the UK especially the UK, which is predicted to experience a roughly double digit drop in sales this year), may read these as positive figures, in China it is a different story. Those in the land that refers to the global financial crisis as “the North Atlantic financial crisis” that the growth of domestic tyre sales growth “decreased significantly” decreased by 18 and 12 percentage points. CRIA puts this down to raw material price increase slowing demand. Nevertheless as the above data shows, all the figures are still going north.

According to the report tyre companies have “self-adjusted according to changes in the market” by slowing production growth on the one hand and speeding up the development of “low carbon, environmental protection, energy saving, ‘green’ tyres”. Production growth is said to have slowed to between 50 and 80 per cent of capacity, with stocks still amassing.

Auto market drop affected tyre market growth

Beijing’s decision to implement its so-called Yaohao “road transport vehicle fuel consumption testing and monitoring measures” in March this year is also said to have slowed the growth of vehicle sales and therefore had a secondary impact on tyres. As a result car market increase is said to have been substantially lower (down 30 per cent) over the past two consecutive years, down to 4-5 per cent increase this year.