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View from the Chairman’s Seat

(Rubber Asia) The China Rubber Industry Association (CRIA) acts as an advocate for more than 800 companies operating in the fast growing Chinese market. Recently the organisation’s chairman, Ju Hongzhen, spoke about the current state of China’s rubber industry and what contribution the CRIA hopes to make towards guaranteeing its long-term future.

What is your assessment of the rubber industry’s performance during 2006?

The rubber industry registered healthy and orderly growth in 2006. Rubber production received a boost and large companies as well as large groups emerged as unmistakable winners out of the stiff market competition.
In recent years rubber consumption in China has been on the rise annually. In 2006, it touched 4.5 million tonnes. Natural rubber consumption was 2.1 million tonnes and synthetic rubber 2.4 million tonnes. As for the rubber industry in terms of tyres, in 2006 Chinese radial tyre output grew by 60 per cent, registering a 5 per cent increase over the previous year. Passenger radials and light truck radials produced by foreign manufacturers continued to lead the market, with their market share reaching 70 per cent. Chinese tyre manufacturers are also gradually expanding their market share through the launching new products.

31st July 2007/by Tyrepress Editors

An “Exciting Year”

The 34th Apollo Tyres Annual General Meeting, held in the Indian state of Kerala on July 26, was more than merely an occasion on which to report the company’s latest financial results. For chairman Onkar S Kanwar it was an opportunity to take stock of where the company has been and where it is headed. These thoughts were reflected in his address to company shareholders.

“The India we live in has changed dramatically over the last 34 years, he said in opening. “And especially so in the last ten. Today we stand at the threshold of great opportunity as a nation, for tomorrow will be India’s century.” He added that if India takes on the attitude of “being a winner”, as he believes Apollo has, the nation will continue to grow and “claim our rightful place in the pantheon of leading nations of the world.”

26th July 2007/by Tyrepress Editors

Apollo Reports Strong Q1 Financials

On July 25 the board of directors at Apollo Tyres reported the company’s unaudited results for the first quarter of the 2007-08 financial year, and also named August 27 as the date in which Rs 10 equity shares will be split into ten equity shares valued at Rs 1 each.

First quarter (April to June) net sales closed at Rs 11.5 billion (£138.6 million), an increase of 22 per cent on the previous year’s Rs 9.4 billion (£113.3 million). Net profit was recorded as Rs 546.4 million (£6.6 million), an impressive 369 per cent jump on the Rs 116.5 million (£1.4 million) obtained during the first quarter of 2006-07. Apollo attributes this significant profit growth to stabilising prices in major raw materials such as natural rubber, crude and steel, plus an improvement in key operating efficiencies, including wage cost, interest and depreciation.

The tyremaker further reported that all major product categories experienced substantial growth both in India and South Africa. The highest growth areas were 35 per cent for truck and bus radials in South Africa and 23 per cent for car radials in India.

26th July 2007/by Tyrepress Editors

The End of Cheap Chinese Tyres?

On 1 July, the Chinese government reduced tax relief on tyre exports, causing those involved in importing or selling Chinese produced tyres in Europe to brace themselves price increase. At the same time, as one industry insider told Tyres & Accessories, market conditions are changing and “you are no longer doing Chinese companies a favour by selling their tyres.” So does this move mean the days of cheap Chinese tyres are numbered?

The Chinese government’s decision to cut its previously high tyre export subsidies from 13 per cent to 5 per cent; and to cut VAT refunds on wheels produced for export from 17 per cent to 9 per cent; is designed to address the Republic’s overwhelming export growth and is attempt to manage its trade surplus. Traditionally, export VAT refunds have kept export prices low for tyremakers and tyre and wheel component suppliers exporting out of China. Now, however, according to an Ernst & Young report released 20 June, “any change to a VAT refund rate will impact the prices charged on export goods as well as the profitability of exporters.”

16th July 2007/by Tyrepress Editors

An Untapped Resource? Nokian’s Kazakhstan factory bid

Editorial/Comment, International News

With news of Chinese product recalls and revised tax rules, some people are looking elsewhere to source their tyres. But if a tyre manufacturing colleague said they were about to expand capacity by entering into an off-take agreement in Kazakhstan, they would probably be met with either a blank “where-exactly-is-that face?” or a stream of Borat-related quips. Joking aside, Nokian Tyres, a company that has made a real success of its niche market approach, has reportedly taken the plunge and broken ground on $200 million-worth of production capacity in Astana, the former Soviet country’s capital city.

Although Nokian staff have not immediately confirmed their involvement in the deal, it would see Nokian gain another low-cost production base to supplement its very successful St Petersburg, Russia operation and – just as importantly – a strong and growing market in which to sell its high quality winter tyres. The winter conditions in Ukraine and Kazakhstan are harsh, making studded tyres popular.

6th July 2007/by Tyrepress Editors

Dunlop India Plant Halts Production

Production at Dunlop India’s Sahagunj facility, which re-opened late last year and began producing tyres in January for the first time since 2001, has once again come to a virtual stop. According to state commerce and industry minister Nirupam Sen, a shortage of working capital is the factor behind this stoppage. “I shall discuss the issue with chairman Pawan Kumar Ruia,” he said following a meeting with union representatives and a local member of parliament. During this meeting it was alleged that company management have not been honouring the agreement they made with employees.

News of the facility’s latest woes has been widely reported in India’s media. Newspaper The Statesman has quoted union representative Kali Ghosh as saying “Mr Pawan Ruia has lost all his credibility.” He further stated that the Ruia group had not brought in capital or raw materials to run the plant, and claimed that workers are also owed money.

3rd July 2007/by Tyrepress Editors

Hankook to Raise US Prices

(Akron/Tire Review) Hankook Tire America Corp. announced a price increase of up to 7 per cent on its full line of passenger, high performance and light truck tyres. Increases will vary by product line and size and take effect July 16.

Hankook said the increases reflect rising raw materials costs, particularly petroleum products, as well as higher transportation and general operating expenses. The tyremaker also mentioned that changes in China VAT regulations are factors in the increase.

29th June 2007/by Tyrepress Editors

Incentives Offered for Michelin to Open Thailand Regional HQ

A working group from Thailand’s Board of Investment has proposed granting Siam Michelin tax incentives to aid the company – a partnership between the Michelin Group and the Siam Cement Group – establish a regional operating headquarters within Thailand. The proposed establishment would cost an estimated Bt88 million (£1.38 million) and would service the far-east region.

Board of Investment deputy secretary general Hiranya Sujinai said the suggested incentives were earmarked for a regional operating headquarters that could supply raw materials and parts for Michelin tyres, conduct research and development, promote regional sales and marketing as well as to provide training programmes for Michelin personnel in a number of countries including China, Japan, Australia, South Korea, Malaysia, Singapore and Taiwan.

20th June 2007/by Tyrepress Editors

ExxonMobil to Open New Facility for Specialty Tyre Compounds

ExxonMobil Chemical Company has announced it will begin construction of a facility to manufacture new specialty elastomer compounds that can improve the durability of tyres, make them lighter weight by using less raw material and “significantly reduce fuel consumption.” Start-up of the plant is expected in early 2008 to satisfy demand for the products that combine the flexibility and elasticity of rubber with the low air permeability of plastic.

The plant will manufacture a dynamically vulcanized alloy (DVA) of proprietary Exxpro specialty elastomers and nylon. This new Exxpro-based alloy can be blown into films and used as the air barrier inner liner of tyres. ExxonMobil Chemical expects to commercialize the technology in late 2007. Exxpro marks the first major technology advancement to tire inner liner raw materials since ExxonMobil started producing halobutyl products in 1961.

20th June 2007/by Tyrepress Editors

Far Reaching Consequences

Following negotiations that lasted some three years, on December 18, 2006 the Council of the European Union unanimously adopted the REACH (registration, evaluation, authorisation and restriction of chemicals) Regulation. With the stated key objectives of REACH being the registration of chemical substances and to transfer a measure of responsibility for the safe use and handling of chemicals and hazardous substances from EU member states to those companies producing and importing such substances, this is a piece of legislation that the tyre industry cannot ignore. And it comes into effect on June 1.

As a tyre wears the chemicals contained within are released back into the environment, and while research indicates that the pollution created by tyre wear particles accounts only a small proportion of traffic pollution, there are numerous substances involved. According to the 2006 annual report released by the European Tyre and Rubber Manufacturers’ Association (ETRMA), the European tyre and rubber industry utilises approximately 4,000 raw materials, of which 90 per cent are preparations. Therefore it is perhaps not surprising that the report also indicates the industry has been identified as belonging amongst the five downstream users to be most heavily affected by the REACH provisions.

31st May 2007/by Tyrepress Editors

Marangoni Launches Ringbuilder 3000

For Marangoni Retreading Systems, innovation Ringtread retreading technology is guided by the concept of a “production island”, i.e. a highly automated multi-purpose work centre with input of raw materials (compounds and tyre for retreading) and output of the end product (the retreaded tyre). The result of this philosophy is the new generation of “Ringbuilder” building machines, in version 3000 for large retreading firms and 2500 for medium-sized retreaders. Taking up from where the previous RB2500 left off, the RB 3000 further develops the concept of high-level automation and throughput.

31st May 2007/by Tyrepress Editors

Microwave Ready Tyres

New Jersey based Global Resource Corp. (GRC) claims to have developed a patent pending process that allows for the low cost acquisition of alternative petroleum products from various resources. According to the company, the process uses specific frequencies of microwave radiation to extract oils and alternative petroleum products from secondary raw materials. As part of its broader resource acquisition technology program GRC has revealed, through filing with the US Securities and Exchange Commission, that it intends to build a US$70 million tyre-recycling plant at the site of a former steel works in the state of Pennsylvania.

The facility will take approximately a year to build once official clearance has been granted for work to commence, and when operational will employ around 250 people and be able to process approximately 16,000 kilograms of tyres per hour, according to GRC head engineer Hawk Hogan. The plant will employ the company’s microwave process in a vacuum environment, using what they call ‘molecular vibrations’ to ‘crack’ the hydrocarbon chain and breaking tyres down into their base material components.

18th May 2007/by Tyrepress Editors

World Trade Association Completes 6th OTR Auditing Trip to China

World Trade Association (WTA), a leading independent US tyre wholesaler, recently completed its sixth auditing trip to China to ensure the quality of production for its Xtreme line of OTR tyres. WTA’s auditing team includes former Goodyear engineers with very specific areas of expertise; a compounding specialist, design specialist and plant manager, as well as Jim DeChene, Vice President of WTA. The team recently spent two weeks investigating Chinese manufacturing plants to provide current and future production of both bias and radial OTR tyres.

“Our frequent and extensive auditing is proof of our commitment to the highest level of quality for all of our OTR tire brands,” said DeChene. “WTA’s line of OTR tyres, Xtreme Force and Xtreme Load, are the perfect solution for companies looking for a steady supply of quality OTR tires in a market where supply is limited.”

WTA’s audit team spent 12 hours each day for two weeks investigating seven different plants in China. The team checked every aspect of production, including the plants’ overall conditions, raw materials, formulations, production methods and the experience level of its technicians.

16th May 2007/by Tyrepress Editors

JK Tyres Sales & Profit Up

For the quarter ending March 31, 2007 JK Tyre & Industries Ltd posted a net profit of £2.64 million as compared to £435,460 in the corresponding previous quarter. Net sales for the period increased 19.48 per cent to £91.35 million from £76.45 million a year earlier. The company’s net profit during the first half of the current fiscal year stood at £1.68 million, compared with £439,000 during the first six months of 2005-06. Net sales rose 17.13 per cent to £194.73 million from the previous year’s total of £165.26.

At present JK Tyre is the undisputed leader of India’s truck and bus radial market with a market share of close to 80 per cent. The company’s light truck and passenger car radial market segments, while not reaching these levels, are still a healthy 25 and 24 per cent respectively. JK Tyre also enjoys a market share approaching 23 per cent in the nylon truck tyre segment.

14th May 2007/by Tyrepress Editors

Pirelli Tyre Post Positive Quarterly Figures

Pirelli &C. SpA have released company financial figures for the quarter up to March 31, 2007, and this data indicates a largely positive three months for Pirelli Tyre. In the first quarter of 2007 Pirelli Tyre registered a 6 per cent increase in sales, in spite of a negative exchange rate effect, and although faced with increases in raw material prices operating income rose compared with the same period in 2006.

Revenues as of 31 March 2007 were equal to 1,060 million euros, up from 1,000.4 million euros in the first quarter of 2006, an increase of 9.1 per cent on a like-for-like basis, net of any exchange rate effect. EBITDA was equal to 150.9 million euros.

Operating income amounted to 103.7 million euros, an increase of 4.5 per cent compared with the first quarter of 2006 when operating income was recorded as 99.2 million euros. The ratio over sales was substantially unchanged compared with last year, despite increases in raw material costs.

14th May 2007/by Tyrepress Editors