All indicators fell in an all-round way How should the tire industry respond?

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In July 2015, it will be the most difficult period in the history of China's tire industry. There are two incidents that have a significant impact on the tire industry. On July 1, the new national standard for compounded rubber will be implemented; on July 10, the US International Trade Commission will make a final ruling on the “double reverse” of Chinese tires. Affected by this, in the first quarter of this year, various economic indicators of the tire industry fell. How does the tire industry respond to the pressure of dark clouds?

A few days ago, during the 2015 China Rubber Annual Conference held in Guangzhou, the Tire Branch of the China Rubber Industry Association held an enlarged meeting of the 5th Board of Directors of the 8th session to discuss the two major issues of common concern to the industry. The reporter also conducted in-depth interviews for this purpose.

Tire industry indicators fell

China is the world’s largest tire producer and exporter. In 2014, the export volume of automobile tires (excluding non-road tires) exceeded 5 million tons and the export value was 14.5 billion US dollars. Among them, the United States is the largest export market for Chinese tires, and exports account for about 30% of China's total tire exports.

“Although companies are actively responding to minimize the impact of 'double reverse', due to the huge market share in the United States, the impact on Chinese tires and the upstream and downstream industries is huge.” Shi Yifeng, Secretary General of the Tire Association of China Rubber Association, told reporters Analyze the reasons.

First, the United States is the world's largest consumer of tires, accounting for the largest share of China's tire export market. Once exports to the United States are blocked, other markets cannot absorb such a huge market share.

Second, the United States has led the world trend of tire specifications, many series of tires designed and manufactured specifically for the US market, other markets can not form the demand for such tires, or sales lag of at least 3 to 5 years, and 3 to 5 years Lag time is unbearable for tire companies.

Thirdly, all manufacturers have pushed their products to markets in Europe, Africa, Australia, the Middle East, and Southeast Asia, leading to fierce competition in the export markets outside the United States. The difficulty in market development and maintenance has increased dramatically. In such circumstances, it does not rule out other issues. The market emulated the possibility of the United States.

Feng Feng, chairman of Fengshen Tire Co., Ltd., believes that at present, China is in the transition from the world's largest tire country to a powerful country. Among the world’s top 75 tire companies, 29 companies are tire companies in China, of which 10 companies have entered the top 30. . This is rare in other industries in China. The importance of Chinese tires in the world's tire industry is evident. The United States has seen this and has been suppressing the Chinese tire industry.

From 2007 on non-road tires "double anti-", to 2009, "special protection" for passenger cars and light truck tires, and then to the passenger car and light truck tires "double reverse", the United States on Chinese tires step by step Pressing, the all-around blocking intention is very obvious.

Affected by the “double reverse” in the United States, in the second half of last year, the operating rate of Chinese tire companies had dropped from 90% before the case to about 60%, and the tires and upstream and downstream companies faced tremendous pressure in their production and operations. The CEO of a large tire company told reporters that after the Spring Festival, he had no further orders from the United States. Compared with the ever-increasing production in previous years, this year's Spring Festival tire companies have early leave to stop production and maintenance, and a considerable number of companies stop production for more than 20 days.

According to the statistics provided by the China Rubber Association (ACFA) for 44 tire companies, sales revenue fell 15.32% year-on-year in the first quarter of this year; comprehensive tire output decreased by 7.09%, including a radial tire output decrease of 6.31%; export tire delivery Decrease of 9.76%, delivery value decreased by 18.99%; realized profit reduction of 44.39%; inventory (value) increased by 3.97%. "In addition to stocks, all economic indicators of the tire industry fell in the first quarter. This is a phenomenon that has never been seen in the history of the tire industry." Shi Yifeng told reporters.

New standard for compound rubber will tumble down the competitiveness of tire companies

"The new standard turns composite rubber into a new 'composite material' that is not in the category of raw rubber for tire companies. If composite rubber is used, it must be 'ordered', which is technically difficult to achieve." Shen Jingrong, chairman of Zhongce Rubber Group Co., Ltd., stated the reasons to reporters.

The use of new composite rubber must adjust the formulation of various components of tires, while large-scale tire companies generally have hundreds of rubber compound formulations, and must re-do a lot of tests and adjustments; increase the complexity of use management and processing energy consumption, and increase process control, The management costs of warehouse operations such as warehouse area, warehouse management, and in-factory inspections have increased the company's inventory, making it more difficult for companies to make capital turnover. At the same time, the Mooney viscosity of the composite rubber with 12% fillers will increase dramatically during transportation and storage, which will cause great difficulty for the tire enterprise application and greatly increase product safety risks.

Shen Jinrong believes that tire companies will no longer be able to choose to use composite rubber because of technical difficulties and complex management. This will increase the material costs, management costs, and quality control of tire companies. If the new standard for composite rubber is implemented, it would be equivalent to closing the entrance to compound rubber.

Shi Yifeng calculated an account for the reporter, if you can not import composite rubber, tire companies can only purchase high-tariff general trade natural rubber or increase processing trade natural rubber imports. In 2014, China imported 1.6 million tons of compound rubber. If it were to import rubber in general trade, and the tariff was 1,500 yuan/ton, the whole industry would increase the cost by 2.4 billion yuan. This is just a direct cost increase for tire companies under static conditions, while dynamic indirect costs such as management costs, financial costs, process adjustment costs, product safety costs cannot be calculated.

Shen Jinrong believes that if new standards for composite rubber are implemented, the results will be: First, the cost of tire companies will be greatly increased, the international competitiveness of Chinese tires will be greatly reduced, and the national tire rubber industry will be reinvented; second, the enterprises are encouraged to import more processing trade natural rubber. Reliance on exports is higher, resulting in more trade friction risks. Third, plastics companies will have to seek alternatives such as synthetic rubber, which further aggravates the global surplus of natural rubber, leading to further decline in global natural rubber prices, rubber farmers. Will fall into a more difficult situation; Fourth, it is not conducive to independent innovation of tire companies, to suppress the Chinese tire industry at the bottom of the manufacturing chain.

Industry Calls to Suspend New Standard for Compound Rubber

Faced with the enormous difficulties faced by the industry, on the one hand, the industry hopes that the state will give policy support, and on the other hand, it will also look for reasons from its own development.

"The Association has already made a report to the relevant departments of the State and fully reported on the difficulties faced by the tire industry. At the same time, it put forward four recommendations: First, it hopes that the national level can effectively communicate with the United States and strive for better results in the 'double reverse' final determination; The second is to hope that the government will adopt strong countermeasures against the United States; the third is to recommend the suspension of the implementation of compound rubber national standards and the elimination of natural rubber import tariffs; and the fourth is to increase the tire export tax rebate rate and implement a full tax rebate."

Xu Wenying, secretary-general of the China Rubber Association, said that the US "double opposition" and compound rubber standard adjustments have occurred at the same time. This has caused Chinese tire companies to be blocked in both supply of raw materials and sales of the market, internal and diplomatic difficulties, suspended the implementation of compound rubber GB, and cancelled the import tariff of natural rubber. Tire export tax rebate rate is a feasible measure that the country can easily achieve to help the Chinese tire industry tide over difficulties.

She stressed that tires and natural rubber are the upstream and downstream industries, and they are closely related to each other. “The skin does not exist, the hair is attached.” Therefore, it is hoped that national policies and standards should consider the healthy development of both industries. It is understood that relevant state departments are doing research work.

Yuan Zhongxue, Chairman of the Software Control Co., Ltd. pointed out that the Chinese tire industry has developed rapidly in the past decade or two, and the capacity expansion has been too rapid. There are indeed many problems in the rise and it is worth our careful consideration. Compared with developed countries, China’s industrialization time is too short, and the quality of industrial culture is not high. The industry associations that understand the development of the industry are relatively weak in management and have limited influence, resulting in blind investment in the industry, serious structural overcapacity, and scientific research and development and brand building. There are few inputs. Compared with world-famous brands, the quality of domestic tire products is not perfect and there is a gap between them. We can't do it without buying our products.

He believes that China, as the second largest economy, is also expected to be suppressed by the United States, the largest economy. The key is that we must try hard to accelerate the improvement of industrialized cultural quality and strengthen our ability to deal with various challenges.

Wang Feng emphasized that Chinese companies must change the destiny of industrial workers to “work hard”, and the deep integration of industrialization and informatization and the realization of smart manufacturing are one of the main approaches. In terms of green tire manufacturing, Aeolus has achieved global non-differentiation. Although tens of millions of dollars are invested each year, it is very worthwhile, which promotes the improvement of product quality and brand effect. He called on the industry not to fall into an unordered development environment. Under the new normal, only the enterprises that lead in innovation and innovation are the real heroes.

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