Mar 23, 2017
According to data provided at the rubber industry conference held in Guangzhou last week, China Rubber Conference-2017, in this sector for 2016 there was an increase in sales by 4.4%, which contrasts with the results of 2015, when there was a decrease of 11.3 %.
The decrease in sales growth was shown by tire segments for two-wheeled vehicles, conveyor belts, hoses, carbon black and rubber waste, and in the rest sectors there was a steady growth, and overall the total profit of the sector jumped by 11.6%. For comparison, in 2015 this indicator decreased by 17%.
According to the local association of the rubber industry (CRIA), positive results were achieved mainly due to tires and automotive components. The non-tire segment improved performance due to investments in permanent projects, and the tire segment showed an increase in production volumes.
Over the past year, tire production in China increased by 8%, to 610 million units, including 444 million passenger tires, 121 million truck tires and 45 million tires with a diagonal cord.
"About 70% of China's consumption of natural rubber falls on tires," said Zhongce Rubber chairman Shen Jinrong during the conference. "Over the past six months, the Chinese market has undergone tremendous and unexpected changes that have led to a significant increase in the volume of rubber consumption."
In September 2016, China tightened the legislation on the transshipment of heavy vehicles, and this led to an increase in sales of truck tires by 30%, mainly in the fourth quarter of 2016. In January and February 2017, demand growth reached 100%. In the primary equipment segment, the figures also doubled.
Rising prices for raw materials, continued Shen Jinrong, encouraged the purchase of tires by distributors, retailers and end-users, who are afraid of rising prices. Sales of tires in the replacement market for the period increased by at least 20%.
Moreover, the anti-dumping investigation conducted in the United States regarding Chinese tires led to an increase in exports, albeit at a low price - consumers bought tires for future use, without waiting for regulatory approval and subsequent increase in the cost of production.
Shen Jinrong noted that the situation may be temporary, however, as the data show, this period is delayed due to the continued recovery of China's economy and structural reforms.