Guizhou Tyre terminates ‘all-steel tyre project’

On 11 January 2023, Guizhou Tyre (also known as Advance Tyre) stated that it has terminated one of its recent tyre manufacturing projects before it got to the construction stage. Guizhou Tyre said its “3 million sets of high-performance all-steel radial tyres” a year construction project was closed down effective 31 December 2022.

Guizhou Tyre expressed concerns about China’s all-steel radial tyre market. According to data from the China Rubber Industry Association (CRIA), the capacity utilisation rate of China’s all-steel tyres was 60.8 per cent in 2022, a year-on-year decrease of 17.7 percentage points. Guizhou Tyre commented: “The leading tyre enterprises have increased the production capacity of all-steel radial tyres in recent years, and the market competition has become increasingly fierce. Under weak demand and rising costs, the capacity utilisation rate and gross profit margin of Guizhou Tyre’s all-steel radial tyre products have declined.”

In other words, Guizhou Tyre terminated the all-steel radial tyre project to avoid risks associated with its business strategy. At the same time, the tyre manufacturer plans to use the 1.6 billion yuan (about £195 million; 220 million euros) raised for the all-steel tyre project to invest in the annual production of 380,000 all-steel engineering radial tyres. At present, the engineering tyre project has completed the project investment filing and environmental impact assessment filing. Guizhou Tyre stated that from 2021 to 2022, the capacity utilisation rate of its all-steel engineering radial tyre products has remained above 95 per cent, and the gross profit margin of its engineering products is higher than that of all-steel radial tyres.

According to Guizhou Tyre’s plan, the new project’s main products are all-steel engineering radial tyres and giant engineering radial tyres, and the construction period is two years and six months. After the project is completed, it can realise an average annual revenue of 2.55 billion yuan (about £311 million; 351 million euros) and an average yearly after-tax profit of about 200 million yuan (about £24.36 million; 27.49 million euros).