Overview of rubber tire industry

Second, tire basic knowledge

1. Classification of tires

Structurally, automobile tires can be roughly divided into bias tires and radial tires. The main difference is that the radial tire is the body cord line arranged in the meridian direction and wound side by side, while the bias tire cord layer is diagonally crossed, but it has been gradually replaced by the radial tire. Radial tires can be divided into passenger tires and commercial tires according to the application field, semi-steel tires are mainly used in passenger cars and small commercial vehicles; All steel tires are mainly used in large commercial vehicles such as buses and trucks. If classified according to the source of tire demand, it can be divided into matching tires (new car supporting demand) and replacement tires (replacement demand). Among them, supporting tires are closely related to automobile production, and the replacement market depends on passenger and freight turnover, car ownership and other factors. Supporting market and replacement market are mutually complementary, symbiotic and co-growing relationship.

Table 2: Tire classification

2. Composition of production cost:

According to the annual report of listed tire companies, the cost composition of domestic tire production mainly includes raw materials, labor costs, equipment depreciation, energy and other costs. Tire belongs to the chemical industry, its cost is mainly affected by raw materials, the raw materials required for tire production are natural rubber, synthetic rubber, steel cord, cord fabric and carbon black, among which natural rubber and synthetic rubber are the most important raw materials in tire production, and the procurement cost of rubber is vulnerable to the exchange rate, international situation and other factors. Domestic tire factories have less investment in brands and channels, low brand premium, and high degree of automation of tire production lines, so raw materials account for a very high proportion of production costs (70%). Taking Linglong Tires, Cylun tires and Senkirin as an example, the proportion of raw material costs in operating costs in 2021 is 76%, 84% and 69%, respectively, accounting for an average of about 3/4. Among them, the proportion of natural rubber is 30%-40%, and the proportion of synthetic rubber is about 20%-30%, and the price fluctuations of the two have an important impact on the price of tires and the operating rate of tire plants.

3. Classification of tire market demand

The demand for tires comes from two aspects: the demand for new tires corresponds to the supporting market, and the demand for old tires corresponds to the replacement market. According to Linglong tire prospectus, at present, about 75% of the world's tires are sold through the replacement market, about 25% of the tires are sold directly to major vehicle manufacturers, and more than 70% of the tire industry demand is created by car ownership, which means that the business and profit source of tire manufacturers mainly comes from the stock market, even if car sales have negative growth. Still creates a constant demand for tire changes. It can be seen that replacement tires are the main market for tire demand. In addition, the single weight of half steel tires is basically about 6 kg, while the single weight of all steel tires is as high as 60-70 kg, and the replacement coefficient of all steel tires is higher than that of half steel tires, so the proportion of natural rubber in all steel tires is significantly more. Therefore, from the perspective of the impact of tire demand on the consumption of natural rubber, the impact of all-steel tires is greater than that of semi-steel tires, and the proportion of replacement tires is higher than that of matching tires.