News from Notch Consulting, Inc.

September 7, 2011

China’s Shandong Province to shift production to high performance & fuel efficient tires

Filed under: General, Tires — Notch @ 9:35 am

European Rubber Journal (subscription required) picks up an intriguing piece of news published in the Qilu Evening News (Chinese language), a local paper in Shandong Province.

The article is based on a report published by a Provincial Committee and it states that tire production in Shandong Province is likely to be around 270 million units annually under the current 5-year plan, slightly below the 299 million units produced in 2010 (or 46 percent of the national) of about 586 million (note: this probably includes only passenger/truck/bus tires).

Of this 270 million, around half are likely to be high-performance or low rolling resistance products.

The development priority in the current 5-year plan is therefore not to increase production numbers, but to raise the technological level of the tyres being produced, to meet international demand for low-rolling resistance and high speed performance.

This article highlights the two major trends of the Chinese tire industry that Notch sees going forward: First, that the industry is maturing, and annual growth will slow to more sustainable levels in coming years from the breakneck pace of the last 15 years. And second, that as the industry matures it will move more aggressively into higher performance sectors, which hitherto have been the province of the multinational players.

The implications for raw material suppliers is that, while the volume of materials required may not be growing at the pace it had been, the mix of materials will change over time. The industry will require more SSBR (solution styrene-butadiene rubber), more 100 and 200 series carbon blacks and precipitated silica, and more HMLS polyester tire cord and nylon 6.6 cap ply, among other materials.

World Trade Organization rejects China complaint regarding U.S. tariffs on Chinese tire imports

Filed under: Tires — Notch @ 8:25 am

China Daily reports that U.S. tariffs on Chinese tire imports have harmed Chinese producers and the September 5 WTO ruling will make matters more difficult. The WTO rejected China’s complaints regarding U.S. tariffs on Chinese tire imports. U.S. Trade Representative Ron Kirk claims that the WTO ruling is a “tremendous victory for the U.S. as well as for American workers and manufacturers”. The Chinese Ministry of Commerce states that the tariffs did not have the support of the U.S. tire industry, hurt China’s trading interests, and did not help in reducing U.S. tire imports.

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