Tire market may continue to decline

The tire market rose sharply from January to April. In May, there was a drop in the inflection point. After June, the decline trend was obvious, and the tire companies had limited production. According to reports, in the Guangrao area of ​​Shandong, all-steel tire manufacturers generally reduced production by about 30%, and the price of tires has fallen by about 15% from the peak. Although it is difficult for tire companies to make profits at current prices, the contradiction of oversupply can only make prices look for support. Tire market prices have a slight chance of a slight decline in current prices.

First, overcapacity and inventory increase are the main reasons for the lower tire prices. In early 2010, due to the market's general expectation that the world economy will continue to show signs of recovery, each tire market is in a state of restocking. In the process, manufacturers received a wrong signal that the market was very good. Most of them took it for granted to accelerate production. Reseller replenishment was also very positive. As a result, the tire inventory of current manufacturers and dealers increased significantly. From January to May, the inventory of 43 major tire companies in China increased by 23% over the same period of last year.

Second, the production capacity of tires, especially all-steel tires, has grown rapidly. After the financial crisis, China adopted a proactive fiscal policy, and considerable funds were invested in tire projects that were effective. According to preliminary statistics, there are currently 40 new tires or expansion projects in China, and only 10 of them are known as the "tire nests," which are known as Guangrao in Shandong, and the radial tires are under construction at a scale of 50 million. It is expected to be in 2010 and 2011. Two years scale. After all these projects are completed, China’s total steel and tire capacity will increase by 40 million units, and semi-steel tire capacity will increase by 130 million units, which will greatly exceed current demand in China. Excessive excess production capacity will intensify tire industry price competition.

Again, the decrease in demand is the driving force behind the decline in tire prices. In September 2009, the U.S. government announced a three-year punitive tariff on imported cars and light truck tires from China. In 2010, the export of semi-steel tires in the United States was less than 20% of the normal level. The EU has also erected REACH “environmental protection barriers” for tires made in China. When the export was blocked, most tire companies began to shift their strategic focus to the country. This kind of turnaround is very difficult and the demand in the domestic market has changed significantly after May and June. In the first half of the year, the inventory of cars has reached 1.269 million and will once again face destocking. July and August are often the off-season sales of cars, and high car inventory is enough for the market to digest for some time. Dealers faced an uncertain economic environment by choosing to stop purchasing and destocking, and the market's demand was significantly reduced. This will also put pressure on tire prices.

Finally, the prices of bulk raw materials such as rubber can hardly support the upward trend in tire prices. In 2010, the supply and demand of natural rubber will maintain the overall balance and may be slightly sufficient, which will change the natural rubber supply for three consecutive years. Since May, the International Rubber Research Organization and major producing countries have begun to increase their natural rubber production forecast for the current year. Production in the main production period in the third quarter will increase significantly. The increase in production in 2010a is a foregone conclusion. On the demand side, because of the current gloomy economic environment, it may cause the market to suppress the demand for natural rubber; and recently, the inventory of tires in the downstream market of natural rubber is high, and it will take a long period of time to digest the inventory. The use of measures has led to a reduction in the demand for rubber in China. Comprehensive analysis, rubber and other raw materials to maintain the current price or the possibility of a greater decline, it is difficult to support the upward trend in tire prices.