Sailun plans to launch OTR tyre project

On 2 March 2023 the Department of Industry and Information Technology of Shandong Province stated that it agreed to Zhucheng Yong’an Rubber Technology (Yong’an Rubber) to undergo a “capacity replacement” at its tyre production facility. The company in Zhucheng, Weifang, plans to dismantle the production capacity of 300,000 all-steel radial tyres and 5.46 million semi-steel radial tyres and launch a project with an annual output of 70,100 tons of OTR tyres. The Chinese government calls this behaviour “capacity replacement”, meaning that a company must withdraw its equivalent production capacity if it wants to build a new project.

Yong’an Rubber dismantled the all-steel radial tyre production line in March 2022 and plans to start dismantling the semi-steel radial tyre production line in March 2023. According to the plan, the construction of the new OTR tyre project will begin in March 2023 and be completed in May 2024.

Tyrepress’s Chinese sister site, Tyrepress China notes that Yong’an Rubber had undergone bankruptcy and reorganisation over the years 2020-21. The company was formerly known as Anchi Tyre, established in 2004. In January 2019, the Zhucheng Court accepted Anchi Tyre’s application for bankruptcy liquidation. In September 2020, the managers of Anchi Tyre announced the recruitment of reorganising investors. The information at that time revealed that the annual production capacity of Anchi Tyre was 750,000 all-steel tyres and 2 million semi-steel tyres. In addition, Anchi Tyre has obtained project approval for 300,000 all-steel tyres and 6 million semi-steel tyres, as well as environmental protection and energy consumption acceptance.

Sailun establishes Yong’an Rubber

After the announcement, Sailun participated in the reorganisation of Anchi Tyre. In 2021, it completed the bankruptcy reorganisation of Anchi Tyre and established Yong’an Rubber. Sailun’s 2021 annual report shows that in August of that year, they acquired 100 per cent of the equity and business decision-making control of Yong’an Rubber for 202 million yuan. Sailun remains the controlling shareholder of Yong’an Rubber.

According to its 2021 annual report, Sailun has two companies in Weifang. The business of Sailun (Weifang) is “sales of tyre products”, and Yong’an Rubber is responsible for the “production and operation of tyres”. Sailun (Weifang) and Yong’an Rubber’s registered addresses are No. 263, Zhufeng Street, Zhucheng City, Weifang City, Shandong Province. Therefore, Sailun should have only one production base in Weifang. The same annual report shows that Sailun’s projects under construction in Weifang include “a project with an annual output of 1.2 million all-steel radial tyres and a project with 6 million semi-steel radial tyres”. Both projects under construction are due to be completed in 2023.

At present, the public information does not disclose whether the replacement production capacity of Yong’an Rubber belongs to the new production capacity of Sailun Weifang Base or the original production capacity of Anchi Tyre. If Sailun is to replace the production capacity of the original Anchi Tyre with the OTR project, the annual production capacity of Sailun Weifang Base in 2024 may reach 1.2 million all-steel radial tyres, 6 million semi-steel radial tyres and 70,100 tons of OTR tyres.

It is worth noting that Sailun, as a listed company, has not disclosed the specific situation of Yong’an Rubber’s proposed OTR project on the premise that the Shandong authorities agree to the replacement of production capacity. The particular investment amount of the Yong’an Rubber OTR project is not yet known.