Imports
The Xinhua News Agency, China’s official press service, reports the country’s Ministry of Commerce “appreciates” India’s decision to terminate a trade investigation into Chinese manufactured passenger car tyres. According to Xinhua, a statement on the ministry’s website says the decision “decision would not only help boost the steady development of bilateral trade ties, but also benefit the downstream businesses of India.”
Now President Barack Obama has stuck 35 per cent import duty on all passenger car and light truck tyres from China for the next three years what happens next? Chinese tyre manufacturers won’t want to sell fewer tyres each year. But US importers, consumers and manufacturers are equally unlikely to want to pay or absorb the additional costs. Tyres & Accessories spoke to a range of US, Far Eastern and Chinese companies and found that manufacturers are having to rely heavily on production flexibility, while traders are now setting their sights on one market in particular – Europe.
Stephen Wu, managing director of Chinese tyre trading operation, Best Choice International, reports that orders from the US stopped came to a virtual standstill in July. Their strategy is now openly towards producing more European market orientated products: “We stopped an SUV/LT project and waited for the decision. And we produced more European UHP tyre sizes, not US sizes.” Companies like Best Choice are now prioritising orders in other markets – especially Europe – where they aim to sell the most popular sizes, UHP and winter tyres. Best Choice is apparently interested in other markets as well, but Wu refused to give further details at this time. As far as Best Choice is concerned there is now zero chance of getting orders in the first year of the tariff, except in the 19-inch and over category. As a result competition is likely to be based on just two factors: price and delivery time.
Maritime Cargo Services, a Suffolk-based freight forwarder, was founded by Rob Shelley nearly twenty years ago. Through building relationships with tyre-based companies importing products into the UK, it can now count itself among the country’s leading freight forwarding specialists in the industry. Working closely with 20 major tyre importers, the company manages the customs clearance and delivery of containers to well over a hundred tyre warehouses and depots throughout the UK and Ireland. The company talked to Tyrepress.com about its recommendations for the tyre sector and issues currently affecting global tyre wholesaling.
2009 could be a breakthrough year for the Korean tyremakers. A collection of circumstances (some clearly the result of famed Far Eastern forward planning, and others distinctly more fortuitous), mean Kumho, Hankook and Nexen have found themselves poised to sell increasing numbers of replacement tyres in the UK and Europe. In addition, their successful efforts in the OE department – ironically helped along by the shaky macro-economic environment – mean this perfect storm of variables could leave the Korean manufacturers in an even stronger position when the dust settles. In the UK, a market where mid-range and economy tyres make up around 60 per cent of unit sales, official figures show that 4.7 million passenger car tyres of South Korean origin were imported last year. However, this cannot be the complete total because it only includes tyres imported from factories actually situated in South Korea. Owing to the fact that all three have significant manufacturing presences in China, and tyres often enter the market by “indirect routes,” it is likely the true total is a lot more.
European carmaker’s association ACEA has written an open letter to the European Commission urging it to reassess the conditions of the forthcoming free trade agreement (FTA) with South Korea. According to the ACEA, the FTA will “have a significant impact on jobs and competitiveness in the EU economy and rushing into signing a bad agreement is wrong.” ACEA reported that the trade commissioner intends to initial the FTA in October.
TTC stands for Technical Tire Consulting, a team of specialists with many years’ experience in the field of tyre manufacturing and familiarity with the latest technologies. During their time in the business the consultants have been responsible for building world class manufacturing facilities, such as those producing drop centre tyres, and have knowledge of all aspects of the business at their fingertips.
Following the Obama administration’s decision on Chinese tyre imports, Toyo Tire & Rubber has announced it will soon stop producing passenger car and light commercial vehicle tyres for the US market in China. "Most of those tyres will soon be manufactured at our plants in Japan," the company said in a statement. "Our number one priority is customer satisfaction, and we are making every effort to minimise disruption in supplies to our dealers by expediting these production changes."
Brazil has informed the World Trade Organization it has now come into compliance regarding its used tyre trade dispute with the European Union. The WTO ruled that Brazil’s ban on retreads from the EU discriminatory as it permitted them to be imported from other South American countries. To rectify the situation, Brazil has outlawed the importation of such tyres, regardless of their origin.
The Chinese government has welcomed a US Court of International Trade ruling that the US Department of Commerce imposition of anti-dumping and countervailing duties on Hebei Starbright Tyre Co., Ltd might result in it paying twice. According to the Xinhua news agency, the US court ruled that the Department of Commerce should either scrap the countervailing duty or amend its methodologies and procedures of levying anti-dumping measures and countervailing duty on merchandise from China within 90 days.
The news refers to the fact that, on 31 July 2007 The US Department of Commerce decided that it would launch anti-dumping and countervailing probes simultaneously into China-made off-road tyres. On 4 September 2008 it introduced a 19.15 per cent anti-dumping and a countervailing duty ranging from 2.45 per cent to 14 per cent on the Chinese produced tyres.
Pirelli Tire achieved a high 7.7 per cent operating profit margin in first half 2009. The figures come despite a negative raw material impact (-19 million euros) and despite a 16 per cent drop of volumes and a low capacity utilisation rate of 75 per cent.
Pirelli Tyre CEO, Dr Francesco Gori made the remarks at a presentation given during the Frankfurt motor show. And the good news left analysts predicting the company’s financials should improve significantly in the coming quarters due to an estimated 100 million euros positive raw material effect; a recovery of volumes with capacity utilisation reaching 90-95 per cent; and “the full payback of restructuring measures.”
Reporting on the presentations, Deutsche Bank analysts observed that Pirelli’s tyre business should benefit from the Brazilian government’s recent decision to impose import tariffs Chinese made tyres. The tariffs of US$0.75/kg are seen a significant plus for the company, in a market where the group already enjoys 30 per cent market share and “above average operating profit margin.”
Chinese imports are said to represent approximately 10 per cent of the Brazilian market.
Tire Review has compiled a variety of news stories based around the introduction of tariffs on imported China-made passenger tyres. Here is a sampling of the most relevant items from the past day:
The Obama administration’s announcement that it is to impose tariffs of up to 35 per cent on Chinese-manufactured imports had a large impact on daily trading in the USA and Seoul, as Goodyear and Cooper shares bumped, and Hankook stock floundered.
President Barack Obama’s decision to apply a 35 per cent import duty on all passenger car and light truck tyres from China for a period of three years may have been intended to “remedy market disruption caused by a surge in [Chinese] tyre imports” into the US, but it has also provoked a sharp response from the Chinese ministry of commerce and played havoc with the share prices of Far Eastern tyre manufacturers. China’s state media said the US import duties would cost 100,000 jobs and $1 billion (£600 million).
Announcing the decision (on Friday 11 September 2009), the White House explained that the 35 per cent ad valorem levy would be placed in addition to the existing 4 per cent import duty on imports of Chinese-product passenger car and light truck tyres. The duty will reduce to 30 per cent ad valorem in the second year, and 25 per cent ad valorem the third year. The US International Trade Commission had recommended a 55 per cent tariff in the first year, 45 per cent in the second year and 35 per cent in the third year.
In the midst of some of the worst falls in Europe truck tyre production in a decade, opinions about the short and medium term prognosis for the segment remain divided. But while the research available fails to offer conclusive answers to the question of whether or not the truck tyre market has yet “bottomed out”; and fails to clearly indicate whether or not it is yet in recovery mode, there are signs that the worst is over. Looking at the SMMT’s UK commercial vehicle registration figures is a depressing place to start, but it reflects how bad the situation has been up till now. This data shows that there were just 309 3.5 – 6 tonne truck registrations (-35.89 per cent) in August; 7,531 3.5 tonne van registrations (-34.56 per cent); and 1546 heavy truck registrations (-46.49 per cent). Year-to-date registrations aren’t any better and are currently -43.88 per cent, -21.79 per cent and -44.59 per cent for each of those three segments at 203,117; 5,669 and 32,263 registrations respectively. According to SMMT chief executive Paul Everitt, not only are the truck and van markets “dogged by weak demand,” but the outlook is that “van and truck registrations will stabilise at around 45 per cent down” compared with 2008.
Emilio Bolla has been appointed general manager of Marangoni Group’s Shanghai branch. Marcello Gambarini, who held this position throughout the company’s initial exploration, will now return to Italy, where he will continue to supervise activities in China and follow the group’s development in Asia. According to a company statement, Bolla previously worked as a project product manager, a sales & marketing manager and as a general manager, acquiring “profound knowledge of the Chinese market.”
If you would like the latest news from the Chinese tyre industry in Chinese, visit our partner site TyrepressChina.com. Or click below to continue on Tyrepress.
