The tire industry has suffered its most difficult situation in nearly three years

From the tenth session of the Second Council of the China Rubber Industry Association and the Forum of the 2022 China Rubber Annual Conference held in Qingdao last week, the news came out that in the first half of 2022, China's tire industry is in the most difficult situation in nearly three years. According to the statistics of the Chinese Rubber Association, the overall profit of the tire industry fell by 6.61% year-on-year, and the profit growth rate decreased by 31 percentage points year-on-year. Tire production and revenue fell double, of which all-steel radial tire production fell nearly 20% year-on-year.

"The old problems restricting the development of China's tire industry such as high tariffs on natural rubber have not been solved, and new problems such as labor costs, energy consumption, and rising prices of energy and raw materials have become increasingly prominent." Shen Jinrong, senior vice president of China Rubber Industry Association and chairman of Zhongce Rubber Group Co., LTD., said in an in-depth analysis of the difficulties and hot issues facing China's tire industry in 2022.

Shen Jinrong mentioned that the domestic tire industry is facing five major difficulties at this stage.

First, after the "double carbon" goal was proposed, China's economic structure ushered in a major adjustment, the development of steel, heavy chemicals and other energy-consuming industries will be limited, the total amount of domestic cargo transportation will be reduced, and the demand for commercial vehicle tires, especially heavy truck tires, will also decline significantly. Data show that in the first half of the year, the national road freight volume of 17.7 billion tons, down 4.6%, truck sales fell 42.2%, and the related all-steel radial tire production fell nearly 20%.

Second, the mode of transport "rotating iron" and "rotating water" are continuing to have an impact on tire demand. Data show that in the first half of 2022, rail and waterway traffic increased by 20% and 15% respectively compared with the first half of 2019, while road traffic decreased by 7% compared with the first half of 2019.

Third, the old problem of high tariffs on natural rubber imports that restricts the development of the industry has still not been solved, and domestic tire companies have to use composite rubber and mixed rubber with high quality difference.

Fourth, some new problems have become increasingly prominent, including rising labor costs, higher energy consumption and energy prices, and rising raw material costs, which are superimposed on each other, and the profit margin of tire enterprises has been severely squeezed.

Fifth, domestic consumption demand is declining, and export growth is also slowing down.

In this regard, Shen Jinrong believes that because the domestic tire overcapacity situation will still intensify, industry restructuring and integration, elimination of backward production capacity is imperative. The tire industry should further adjust the structure, eliminate backward production capacity, and continuously improve the quality of economic operation and supply; We should encourage excellent and powerful enterprises to carry out strategic layout; We should also build world-class enterprises and attach importance to personnel training and cooperation. Take green and low-carbon as the starting point, focus on energy saving and consumption reduction, and promote the overall upgrading of the industry; Vigorously promote the application of intelligent technology; Advocate fair competition and industry self-discipline, implement brand building, and achieve healthy development.

Xu Wenying, president of the Chinese Rubber Association, stressed that at present, China's rubber industry is at a new starting point to achieve the goal of "double carbon", the entire industry should firm confidence in development, steady growth, promote transformation, further strengthen the leading role of scientific and technological innovation in the transformation and upgrading of the industry, accelerate the transformation and upgrading of traditional processes with new technologies, constantly make up for weaknesses, strong and weak, and strive to cultivate new momentum and new advantages.

Lei Changchun, vice president and secretary-general of the Chinese Rubber Association, believes that the industry's leading enterprises should play a positive role in stabilizing production and stabilizing the market, effectively control costs, open source and throttling, strengthen coordination, overcome difficulties with suppliers and dealers, accelerate the pace of international development, and strive to enhance the international competitiveness of China's rubber industry.