Up to 49” – Sailun upgrading OTR tyre production

On 18 January, Sailun Group announced an 833-million-yuan (approximately £99.63 million, €99.21 million) investment to upgrade off-the-road (OTR) tyre production at its plant in Qingdao, China. The upgrade will allow Sailun to produce OTR tyres in sizes up to and including 49-inch. The tyre maker intends to complete this upgrade and adjust its production portfolio within a period of ten months.

This project involves a capacity of 40,000 tonnes per annum. As Tyrepress China reports, overall capacity in the Qingdao plant will not change, rather these larger OTR tyres will replace the prior production in the 40-inch and below size range. Sailun intends to relocate or eliminate some of this original OTR production.

The 833-million-yuan investment includes 726 million yuan (about £86.83 million, €99.21 million) of construction investment and 107 million yuan (approximately £12.8 million, €14.62 million) working capital. According to Sailun’s calculations, once the upgrade is completed and production commences, it can realise an annual operating income of 1.315 billion yuan (about £157 million, €180 million) and a net profit of 312 million yuan (£37.32 million pounds, €42.64 million).

Profitable & qualitatively competitive

Sailun states that its giant OTR tyres are highly profitable and, after years of hard work, technically comparable to leading international products. The tyre maker anticipates that upgrading the Qingdao OTR facility will enable it to rapidly grow in domestic and overseas markets, further expanding Sailun’s popularity and market influence. Furthermore, Sailun hopes to enhance its core competitiveness and increase market share through the ongoing development of marketable products.

In regards to the off-highway tyre market, Sailun notes that giant OTR tyres are expensive and complex to manufacture, and compared with the fiercely competitive passenger car and commercial vehicle tyre markets, the market environment for these products is relatively good and profit per unit is significantly higher. According to a recent market report from Smithers Rapra, capacities within the global off-road tyre market will grow at an annual rate of four per cent from 2021 to 2027, and the market value will grow at a rate of 5.2 per cent. In 2027, the global market for off-road tyres will be about 3.7 million tonnes.