Domestic tire leading enterprises, to build a world-class brand

  Among them: China Mainland's Zhongce Tire achieved sales of 4.528 billion US dollars, ranking eighth in the world; China's Taiwan Zhengxin Rubber achieved sales of 3.866 billion US dollars, ranking 10th in the world;  

2.2. Downstream demand: The huge automobile market has brought stable demand, and new energy vehicles have injected new momentum

The huge automotive market has brought stable demand to the tire industry. From 2010 to 2019, the compound annual growth rate of global automobile production and sales was 1.87% and 2.21%, respectively. Affected by the epidemic, global automobile production and sales declined in 2020, but as the impact of the epidemic dissipated, global automobile production and sales began to recover in 2021-2022. According to Wind data, the global automobile production and sales in 2022 will be 85 million and 82 million, respectively. With the global automobile production and sales returning to the growth track, the global automobile ownership will remain stable growth, promoting the continuous expansion of the tire market.

2.3. Industry prosperity: overseas demand recovers, raw material prices fall, and industry prosperity recovers

2.3.1. 2022: Replacement demand remains subdued and the shipping cycle leads to high overseas inventories in the second half of the year

Demand for passenger cars and light truck tires has not yet recovered to pre-epidemic levels, and demand for truck tires has declined. In 2020, affected by the global epidemic, the global tire market demand has declined to a certain extent. After 2021, as the global epidemic situation has eased, the global demand for passenger cars and light truck tires has gradually recovered, but it has not yet returned to the pre-epidemic level. According to the Michelin annual report data, the global passenger car and light truck market demand in 2022 increased by 1%, but there is still a 2% decline compared with 2019. In 2022, global demand for truck tires declined, down 4% from 2021. Passenger car and light truck tire replacement demand is still affected. In 2022, in addition to the CIS region, the demand for passenger cars and light truck tires in the rest of the region has maintained growth, but due to the impact of the epidemic and the relative weakness of the economy, the replacement demand in the CIS, China and North America has declined to a certain extent.

Demand for truck tyres in China has fallen sharply. In 2022, the demand for truck tires in the CIS region and China declined significantly, and the rest of the region maintained a certain growth. In 2022, China's truck tire demand fell by 26%, of which supporting demand fell by 44% and replacement demand fell by 14%.

Affected by the return of the shipping cycle to normal, there is a backlog of overseas inventories in the second half of 2022, which inhibits China's export demand. In 2022, China's tire exports declined to a certain extent, and a total of 553 million new inflatable rubber tires were exported in 2022, down 6.6% year-on-year. Especially in the second half of 2022, as the sea freight shipping cycle returns to normal, overseas tire dealers have high inventories, and it takes some time to reduce inventories, resulting in a decline in tire exports in the second half of 2022. New pneumatic rubber tires exported 272 million in the second half of 2022, down 3.4% from 281 million in the first half of 2022.

2.3.2. 2023: Exports show a recovery trend and raw material prices fall

Tire industry bottom pick up, overseas demand continues to repair. Since the first quarter of 2023, with the inventory of overseas dealers gradually approaching the completion of the elimination, overseas demand has picked up, and the export volume of Chinese tires has been significantly repaired. According to the General Administration of Customs and Wind data, the number of China's new pneumatic rubber tire exports in the first quarter of 2023 was 139.07 million, an increase of 1.04% compared with the first quarter of 2022, and an increase of 8.88% compared with the fourth quarter of 2022.

The price of raw materials has fallen, which is expected to open up the profit space. According to Zhuo Chuang Information data, the average price of butadiene rubber, styrene butadiene rubber and carbon black in the first quarter of 2023 was 11182.79, 11382.65 and 10411.27 yuan/ton, respectively, compared with +0.81%, +4.65% and -9.96% in the fourth quarter of 2022, respectively. Compared with the first quarter of 2022, it was -17.49%, -8.39% and +18.57%. The price of styrene butadiene rubber and butadiene rubber decreased significantly compared with the first quarter of 2022, and although the price of carbon black increased year-on-year, it was also in the quarter-on-quarter decline channel compared with the fourth quarter of 2022. Tire industry profit space is expected to open.