Tire industry research framework and investment perspective

Overview of tire industry chain

Tire upstream raw material - natural rubber

The production cycle of natural rubber is longer than that of chemicals, because the planting time of natural rubber takes about 7 years, and a rubber tree usually has a life of 40 years, so the supply rigidity of natural rubber is very strong, and the current natural rubber production capacity is determined by the planting situation 7 years ago or even longer ago.

After 2011, with the weakening of natural rubber prices, the new planting area of natural rubber in the world has gradually decreased, resulting in the total planting area has been maintained at a relatively stable level, and the cutting area representing the actual production capacity of Tianan rubber is still growing. Looking forward to 2023, as long as the price of natural rubber does not appear lower than the cost for a long time, the main production country will still increase slightly, and the global supply of natural rubber will continue to be loose.

From the perspective of the downstream consumption structure of the industry, the product with the largest consumption of natural rubber is still the tire industry, and the consumption proportion is as high as 67%. In addition, latex products, rubber shoes, tires, rubber hose tape, etc., are also important consumer areas of natural rubber, and the operating status of the tire industry has a direct impact on the natural rubber industry.

In 2023, the global and Chinese rubber supply is overall loose, overseas tire consumption is in the process of recovery, domestic demand is expected to improve, the overall supply and demand is still in a loose state, and natural rubber prices are expected to remain low and volatile.

Tire upstream raw material - synthetic rubber

The synthetic rubber used in tires is mainly butadiene rubber and styrene butadiene rubber. Synthetic rubber and natural rubber have strong complementarity, and most tire manufacturers basically mix the two kinds of rubber. The upstream raw material of synthetic rubber is mainly butadiene, and butadiene is mainly a by-product of ethylene cracker in refinery, so the price of synthetic rubber is closely related to oil prices.

From the point of view of supply and demand, synthetic rubber is still in the stage of overcapacity and does not have the basis for a substantial price increase. As the oil price tends to stabilize, the price of synthetic rubber is expected to remain in a reasonable range, and the 23-year price is expected to decline.

Tire upstream raw material - carbon black

Carbon black can improve the physical properties of rubber to a large extent, and is an indispensable reinforcing agent in tires. Adding 30% reinforced carbon black to tires can increase the mileage of tires to 4-6 miles. Carbon black can increase the wear resistance of rubber products, extend the service life of tires and save costs.

Supply: The carbon black industry is a highly polluting and energy-consuming industry, the new supply in the industry is not much, the opening rate is also maintained at a low level, backward production capacity is gradually withdrawn, and the future supply is expected to continue to tighten. Demand: With the recovery of the global epidemic, the demand for carbon black will increase significantly in 2021, but due to the impact of domestic epidemic prevention policies in 2022, the demand will decline sharply, and it is expected to gradually pick up in 2023. Exports: About 54% of Europe's total carbon black capacity comes from Russia, Ukraine and Belarus, so the Russia-Ukraine conflict has led to a significant increase in China's carbon black exports. In addition, under the high oil price, the overseas cost advantage is reduced, and it is expected that the export of carbon black will remain at a high level in 2023. It is expected that the price of carbon black will remain high in 2023, and the level of profitability will be improved.

Tire upstream raw materials - rubber auxiliaries

Rubber additives are added in the process of natural rubber and synthetic rubber processing into rubber products, and are used to give rubber products the use of performance, ensure the service life of rubber products, and improve the processing performance of rubber rubber materials. Through scientific matching with rubber raw rubber, rubber additives can give rubber products high strength, high elasticity, aging resistance, wear resistance, high temperature resistance, low temperature resistance, noise reduction and other properties. Commonly used rubber auxiliaries are mainly accelerators, antioxidants, vulcanizing agents, processing auxiliaries, special functional auxiliaries, pre-dispersed rubber masterbatch and so on.

The upstream raw materials of rubber auxiliaries mainly come from the basic chemical industry such as salt chemical industry, coal chemical industry, petrochemical industry, mainly cyclohexane, phthalic anhydride, aniline, tert-butylamine, fatty acids, zinc oxide, wax and so on. Rubber additives downstream for all kinds of rubber products, including tires, rubber hoses, rubber belts, rubber sheets, rubber soles, seals and so on.