Belshina factory idled due to apparent Asian import competition

The Belshina tyre plant is scheduled to re-start production today (1 April 2015) after production ceased on 26 March, according to the Belarusian Independent Trade Union various (BITU), in a move that is seen as indicative of wider economic concerns and is blamed on low-cost Asian tyre imports.

Artur Mikhalap, BITU chairman, commented: “The plant stopped completely, reason unknown to me, but the thinking is the same as in most enterprises – no market. Warehouses are filled up. According to my information the plant stopped only for five days, until April 1.”

The idling has been followed by similar action at Belarus’s leading automobile manufacturer, the Minsk Automobile Plant, which is reported to have stopped on 27 March. However, this plant isn’t expected to re-start until 6 April.

Meanwhile, earlier in March, Belarussian News reported that the Belneftekhim Concern suggested considering increasing the duties on tyres imported to the Eurasian Economic Union at the intergovernmental level, deputy chairman of the Belneftekhim Igor Bobyr is quoted as saying.

His argument is that the work conditions of Belarusian and Russian enterprises are more difficult compared with those of producers based in Southeast Asia, particularly in terms of natural rubber prices.

In autumn 2014 the Eurasian Economic Commission launched an antidumping investigation against China-made tyres and tyre casings for trucks, buses, dump trucks, and trailers. Belarussian News reports that the investigation was started on the request of OAO Belshina, OAO Omskshina, OAO Yaroslavl Tire Plant, OAO Nizhnekamskshina, OAO Nizhnekamsk Truck Tire Factory, and OAO Nizhnekamsk SSC Tire Factory.

Indeed, Belarussian News added that between 2011 and 2013 the total import of truck tyres to the Customs Union (CU) countries increased by 29.8 per cent. Imports from China went up by 36.3 per cent. Its share reached 64 per cent of the total import of truck tyres in 2013.

In 2011-2013 the consumption of truck tyres in the CU increased by 5.1 per cent, while the production of tyres in the CU countries shrank by 9.2 per cent. The share of the CU-made truck tyres on the domestic market dropped by 11.1 per cent.

It appears that with the proportion of Chinese tyres on the market increasing rapidly, and with the Chinese manufacturers offering these at low prices, the Russian and Belarussian firms reduced selling prices in order to compete. However, as you might expect, this led to a sharp drop in profits too.