The label may counterbalance the end of US tariffs, says CRIA

On its Chinese-language website, the China Rubber Industry Association links the recently-expired US tariff on consumer tyres with the European tyre label – and refers to both as a “double whammy” for China’s tyre makers. The tariff, which the association also called an attempt at trade protectionism, is held responsible for China’s tyre passenger car and light truck tyre exports to the US dropping from 43 million in 2009 to 31 million in 2010 and 27.3 million the following year.

According to the CRIA, a survey conducted by China’s National Standardization Technical Committee showed average rolling resistance for locally-made passenger car tyres to be categories ‘E’ or ‘F’ on the European label, enough for the first stage but below the minimum requirements of stage two. The association comments that most Chinese tyre products will be locked out of the European market when the requirements are tightened in several years’ time.

CRIA figures put China’s passenger car tyre production at 832 million units in 2011, a year-on-year growth of 8.55 per cent, and it anticipates that production will exceed 900 million units this year – an amount that represents a third of global output. China’s General Administration of Customs also reports that exports accounted for 42 per cent of total output in 2011. During the first half of this year, exports of steel and semi-steel radials to the US respectively accounted for 24.25 per cent and 18.81 per cent of total segment exports, while exports to the EU accounted for 6.33 per cent and 22.74 per cent respectively. Cross-ply tyre exports to the US accounted for 42.54 per cent of the segment total while exports to the EU accounted for 12.34 per cent.

The CRIA thus comments that China’s dependence on foreign markets will pose serious challenges for the manufacturers of products that compete on price rather than quality or performance. It notes that, in addition to the US tariffs and the ‘barrier’ posed by the EU label, anti-dumping duties on Chiense tyres have been implemented in Argentina, Turkey, India and South Africa, with duties sometimes reaching 100 per cent or more. Furthermore, labelling and related legislation will serve as an unofficial restriction for domestic manufacturers that do not alter their products.

Although demand from the US is expected to increase following the end of tariffs – the CRIA anticipates exports of 50 million tyres, or 30 per cent of the US import market – the association opines that companies exporting tyres from China will continue facing a tough trading environment due to the 1 November introduction of Europe’s tyre label.