What is included in the Chinese tire market

China's tire market

1, tire production capacity, output and meridian conversion rate

According to statistics, there are about 80 tire factories in the country with a total production capacity of about 1.5 billion, of which the semi-steel tire production capacity is about 960 million, and the full steel tire production capacity is about 270 million. In the production capacity distribution of all steel tires, Shandong accounted for 54%; In terms of semi-steel tires, Shandong's production capacity accounted for 48%. There are A total of 9 listed companies in the tire industry in the A-share market, of which 5 are from Shandong (Linglong Tire, Cylun Tire, Triangle Tire, SenQilin, Qingdao Double Star). Therefore, when studying the consumption of natural rubber, it is necessary to pay attention to the production trend of tire enterprises in Shandong Province and the disturbance factors to production.

China's tire production reached its peak in 2014, the phenomenon of overcapacity is serious, and the environmental pollution caused by tire production is serious. Since 2015, China opened the supply side reform of the tire industry, the central and local governments have introduced policies to curb production capacity, encourage mergers and acquisitions and backward production capacity withdrawal, and significantly accelerate the pace of tire enterprises. In April 2021, Shandong Province issued the "Three Resolute" action Plan for the Implementation of the Province (2021-2022) "proposing that by 2022, all steel radial tire enterprises with an annual output of less than 1.2 million and semi-steel radial tire enterprises with an annual output of less than 5 million will be integrated and withdrawn (involving 5.56 million full-steel tires and 25.61 million semi-steel tires of 18 tire enterprises). The elimination of backward production capacity in Shandong Province has great significance for the domestic tire industry.

Meridian rate is one of the important indicators to evaluate the technical level of tires in developing countries or regions. Since the second half of the 20th century, radial tires have gradually replaced the bias tire market. Radial tires require higher production technology, so the meridian rate can reflect the technological progress of tires from the side. In developed economies such as Europe, America and Japan, the transit rate of passenger car tires has reached nearly 100%, and the transit rate of truck tires has reached more than 90%. From the point of view of China's situation, according to the data of the China Rubber Industry Association, China will achieve a tire meridian rate of 94% in 2020. According to the "14th Five-Year" development plan released by the China Rubber Industry Association, by the end of 2025, China's tire meridian rate planning target is 96%.

2, full steel market and semi-steel market

All steel tires are mainly used in commercial vehicles, is China's tire manufacturers earlier layout of the field, production capacity of more than 50% of the world, from the proportion of heavy truck production, all steel tire export data can be seen that domestic all steel tires have advantages in the world. The development of the whole steel tire market is closely related to China's economic structure, real estate projects and infrastructure projects to drive the demand for building materials and industrial production, and then bring a lot of transportation demand, led to the consumption of trucks, promote the development of the whole steel tire market. In the past, when the real estate development investment maintained a high growth rate, the production of trucks also increased, promoting the consumption of the whole steel tire market, ushering in an important turning point in real estate investment in 2021, the domestic economy has moved from a high-speed growth stage to a high-quality growth stage, which means that the real estate investment driven economic model will come to an end in the future. And a large number of traditional infrastructure construction projects have met most of the public demand, domestic cargo transport is shrinking, then the corresponding domestic steel tire market may be difficult to continue to maintain a high growth rate in the future.

The semi-steel market is weaker than the full steel market. Semi-steel tires are mainly used in passenger cars, and the demand for passenger cars is related to residents' income and living standards. According to OCIA, the growth rate of global auto sales is leveling off, and the space for subsequent growth of car ownership per 1,000 people in European and American countries is limited, while domestic is different. China's car ownership has increased year by year, reaching 302 million in 2021, the absolute number is higher, but China's thousand people's ownership is only more than 200, compared with Europe, the United States and Japan and other developed countries 600-800 thousand people's ownership, is still a young car market, the follow-up growth space is larger, will also provide more incremental for the semi-steel tire market. At present, about 70% of the market share of China's car tire market is occupied by foreign and joint venture tire companies, local brand products do not have much advantage, brand influence needs to be further improved, so as to obtain better development.

3, tire export market

The vigorous development of China's tire industry is inseparable from the export market, the development of the export market can be divided into two stages, one is the "export boom period" before 2014, the second is the "export break period" after 2015. In 2015, the total domestic tire exports fell to 445 million, a decrease of 6.58%. Some countries in Europe and the United States have implemented sanctions such as "double reverse" on domestic tire companies, and the export market has been hit hard. In order to deal with the uncertainty of international trade conflicts, domestic tire manufacturers have successively adopted the method of building factories overseas to reduce the risk of sanctions and reduce trade pressure, so as to achieve "breaking the game". Domestic high-quality tire enterprises have set up factories in Thailand, Vietnam and other places, and the export growth rate has changed from negative to positive. In 2021, the total domestic tire exports rebounded to 591.73 million, including the export dividend factor in the post-epidemic era, and whether the high growth rate of exports can continue in the future needs to be questioned. Recently, the EU General Court made the first instance ruling to revoke the European Commission's anti-dumping and countervailing duty order on Huaca bus tires, which means that Chinese truck and bus tires are expected to return to the European market.

4. Summary and outlook

China is now the world's largest tire producer and an important tire exporter, as well as the world's largest rubber consumer and importer. In recent years, the introduction of the backward tire production capacity elimination policy has guided the orderly and standardized development of the tire industry, which helps to improve the competitiveness of China's tire enterprises. The number of domestic tire companies on the list of Top75 tires is gradually increasing, but there is still significant homogeneity, technology, brand and channel lack of advantages, so even if China is in the forefront of the world in terms of output, but there is still room for further improvement in international competitiveness.

China's steel tire market from the production capacity, market share are more advantageous, but the real estate investment driven economic model in the future will come to an end, and a large number of traditional infrastructure construction projects have met most of the public demand, domestic cargo transportation shrinking, so the domestic steel market more for the stock competition, then you need to establish a world-class tire enterprise image, Obtain higher production profits with higher brand premium. China's semi-steel tire market prospects are better, it is expected that there is still room for increment, but the current foreign capital and joint venture tire companies occupy 70% of the market share. There is no idle time, no time again, local tire companies need to quickly enhance brand influence, the product into the high-end car supporting car companies to be recognized, and improve the supporting market share of local tire companies. The export market has been repeatedly subjected to "double reverse" and other sanctions, and in the face of the uncertainty of international trade conflicts, it is still necessary to strengthen overseas factory construction and reduce the risk of sanctions.

Now the new energy circuit is in full swing, for China's tire enterprises is undoubtedly a huge opportunity, the future new energy market space is large, the penetration rate and ownership still has a large room for growth, the tire industry is expected to benefit from the wave of automobile electrification, bringing the supporting end and the retail end of the double good. Data released by the China Automobile Association show that in 2021, China's new energy vehicle production and sales reached a new high, of which new energy passenger car sales were 3.31 million, accounting for 53% of the global market share, surpassing Europe to become the world's largest new energy vehicle market. New energy vehicles put forward higher requirements for the wear resistance and energy saving of tires, so relevant enterprises should continue to increase the research and development of such tires, establish cooperative relations with major domestic new energy automobile manufacturers, open up the tire supporting market for major new energy automobile brands, and achieve overtaking on corners of the new energy automobile track.

In summary, China's tire industry opportunities and challenges coexist, local tire enterprises need to improve the variety of products, quality and technical level, enhance brand influence, reduce cost pressure, and forge ahead toward the goal of large to strong.