The tire industry will continue to grow but profit margins will narrow

The reporter of the 2nd Hainan Rubber Industry Development (International) Forum held in Haikou on November 18, 2014 was informed that experts participating in the analysis believe that the tire industry in China continues to grow, but the profit margins have narrowed, and there are many barriers to development and future profitability. Growth will depend on innovation in business models and ways of thinking.

Chang Yi, director and deputy general manager of Shuangqin Group Co., Ltd., analyzed the external environment of the tire industry, saying that 2014 was the year of the “three-phase superposition” of China’s economy, namely, the shift period of economic growth, the period of structural adjustment, and the period ahead During the digestion period of the stimulus policy, the downward pressure on the Chinese economy was huge. For the tire industry, although the overall operation continues to grow, the problem is even more pronounced.

Deng Yachen, president of the China Rubber Industry Association, said that although the downward pressure on the economy was high during the months after 2014 and 2015, the central government is expected to continue to maintain its high-speed growth under the central government's more precise and targeted policies. The advancement of transportation, highways, high-speed rail and new urbanization will continue to drive the growth of high-performance tires and rubber products.

Chang Yi’s analysis of the tire industry association’s operations shows that from January to September 2014, the tire production increased year-on-year. The increase in output of comprehensive tires was higher than in the same period of 2013. Among them, the growth rate of semi-steel tire production exceeded the growth rate of all-steel tires. For the first time, there was a positive increase in delivery; the growth of export delivery was faster than the growth rate of integrated tires, and the proportion of product exports also increased compared to last year, but the export delivery value decreased year-on-year, indicating that the domestic tire market competition was further exacerbated.

Although the output of tires increased by 10.97% from January to September, due to the general reduction in tire product prices, sales revenue fell by 4.5%. In September, sales revenue decreased by 7.85%, and the downward trend was even more pronounced. In the previous two years, rubber prices fell to rubber companies. After the price dividend brought by the company completely disappeared in 2014, it further deepened the market's falling price expectation and wait-and-see sentiment, making the price of products fall much faster than the decline in raw materials in 2014. The “vicious circle” of falling natural rubber prices and tire product prices has caused the industry profit margin to fall sharply from the same period in 2013.

Chang Yi believes that the Chinese tire industry will enter the "new normal." The overall industry will maintain its inertial growth at medium and low speeds. This is mainly due to the fact that this year's increase in inertia in 2013, the release of production capacity in early-stage investment projects and the relative surplus of medium and low-end production capacity have become more serious. The development of the industry will gradually focus downwards, including the downward shift in product prices and the downward shift in consumer demand. In addition, it also faces a series of development barriers: one is the technical barriers represented by the European labeling law; the other is the trade barriers represented by the United States’ “double opposition”; and the third is the low carbon represented by “tire industry access conditions”. , energy-saving standards.

The direct result is that the industry’s profit margins continue to shrink: the dividends of falling raw material prices have disappeared; the production and income of the tire industry have been broken with the trend increase and decrease; low-cost dividends have also gradually disappeared, and the adjustment of compound rubber standards will further drive up costs. According to calculations, if 1.5 million tons of compound rubber were to be cancelled in one year, tire companies would need to increase the customs duty of 1.8 billion yuan, which would be aggravated by Chinese tire companies whose profits have been declining year by year.

Various factors make the tire industry's future profitability characteristics more pronounced, and companies are also looking for ways to deal with them. Wang Zhihong, general manager of Baishi Asset Management (Shanghai) Co., Ltd. disclosed that due to the “double reverse” effect of the United States, domestic tire companies have shifted their production capacity overseas. Shandong has transferred 40 million sets of production capacity to foreign countries in the past three years to deal with trade barriers.

Many experts believe that the tire industry accounts for nearly 75% of the total rubber consumption, rubber companies and tire companies can be said to be "coincident", the two need to further strengthen communication and coordination to jointly deal with the current difficult situation.

Regarding the future profit orientation of tire companies, Chang Yi believes that the innovation of business models and ways of thinking will be the determining factor. Many traditional channels will disappear due to future changes. Integration of business and finance, integration of business and trade, and service marketing will be the main channels for profitability. The e-commerce model is a good choice. Foreign tire companies have gradually matured their sales channels through the e-commerce model, while only a few domestic companies are exploring and establishing their own e-commerce models.

He suggested that tire companies take the road of brand, quality and sustainable development, and further strengthen the work of new materials research, smart manufacturing, low-carbon economy, circular economy, brand building, modern marketing, and diversified markets, to accelerate the development of green tires. In order to adapt to the market, we will also accelerate the "going out" development strategy.

In addition, the “Belt and Road” may become an important direction for the development of the tire industry. Wang Zhihong believes that China's "One Belt and One Road" strategy, with its infrastructure construction as a breakthrough, will have a profound impact on the industries of energy, steel, and other industries.

“According to relevant agencies, the total length of the “One Belt and One Road” regional railway line planning is already around 10,000 km. According to the current investment of 30 million to 50 million RMB per km, it is estimated that the total investment involved will be 300 to 500 billion RMB. In the Asia-Pacific region, the demand for infrastructure investment in the next 10 years will reach 8 trillion US dollars. With 8 trillion US dollars estimated, it will bring 786,000 heavy trucks in the future, bringing 283,000 tons of natural rubber to demand.” said Wang Zhihong. .



Brass has excellent CNC Machining Turning performance, high-speed machining turning under the brass can get excellent surface finish. Our technical team has very good experience in Machining Brass, machining brass including brass plate, brass rod, brass tube. Brass hardware parts has high strength, good plasticity in hot state, good plasticity in cold state, good machinability, easy welding and good corrosion resistance. Brass parts are very durable. It is electrically conductive and does not usually corrode or deteriorate over time. Thus brass is often used to produce products with longer service life. Machining brass parts Widely used: pipes, radiators, ship parts.

Machining Brass

Machining Brass, Brass Machined Parts, Perfessional Brass Parts Machining, Machining Brass Conponents, Brass Parts Machining

Buildre Group Co., Ltd. ,