China's semi-steel radial tire enterprises suffer from special protection

The negative impact of the tire special insurance ruling on China's tire companies has emerged over time. At present, the production and operation of major semi-steel radial tire enterprises in China have been significantly affected. Exports of semi-steel tyres to the United States have almost stopped, and the operating rate of enterprises has generally fallen by more than 20%, resulting in a substantial increase in semi-steel tire inventories. This is the information obtained from the Tenth Rubber Industry Information Conference and Tire Special Security Seminar. At the meeting, the majority of tire companies strongly demanded that our government could provide support in terms of policies.

Local customs data also confirmed this news. According to statistics from Jiangsu Kunshan Entry-Exit Inspection and Quarantine Bureau, the export value of tires in Kunshan decreased by 34.61% month-on-month in October; according to statistics from the Guangdong Entry-Exit Inspection and Quarantine Bureau, the value of exported tires in Guangdong decreased by 45% month-on-month in October.

"After the implementation of the tire special insurance ruling, the company did not sell a passenger tire to the United States," Zou Yongzhi, general manager of South China Rubber Tire Co., Ltd. told reporters with some helplessness, "tire special insurance has caused a huge impact on the company's production and operation. The company's large-size high-performance tires are mainly marketed in the United States, and the US market is now blocked. These high-performance tire equipments are also difficult to change to tires with other properties, seriously affecting the profitability of the company."

Shen Jinrong, Chairman of Hangzhou Zhongce Rubber Co., Ltd., said: “As China’s largest tire company, we have clearly felt the sting of tire insurance. Now the company has completely stopped exporting tires to the United States. Workers engaged in the production of passenger tires have caused tremendous employment pressure. The company has a strong sense of social responsibility, there is no salary reduction and layoffs, but the company has implemented a wide range of job transfer and training, which is close to the upper limit of the enterprise." When President Barack Obama visited China, Shen Jinrong, chairman of the China National Rubber Industry Association’s tire branch, had the greatest wish that the Obama administration should revisit the tire special protection case and cancel the tire-specific tire protection measures six months later.

Triangular Tyre Co., Ltd. is under no small impact on tires. Sun Shumin, director of the company's international market services division, said that Delta Tire's tire exports to the United States are almost zero.

Jiatong Tire Co., Ltd. said: “The company’s passenger and light truck tires for export to the US market account for approximately 1/4 of the company’s annual sales revenue. The US’s special insurance ruling has a significant impact on the company. The company has stopped production of some of its production lines. Inventory has increased significantly."

Sheng Lihua, deputy manager of Overseas Marketing Department of Shandong Linglong Tire Co., Ltd., said that since the outbreak of tire trade friction between China and the United States, the proportion of the company's export business to the United States in its total global exports has rapidly dropped from 20% to 15%. Market prospects for exports from Africa and the European Union are also not clear. Manufacturers and buyers are worried that trade frictions will spread to these countries and regions.

Tire special protection also killed the construction of the semi-steel radial tire project. In the second half of the year, no enterprise in China announced the new semi-steel tire project. Some of the manufacturers in the upper half of the steel tire project stopped or reduced the project scale. Shandong Dawangzhuang Tire Enterprise announced the launch of 5 million sets of steel tires/year at the beginning of this year, which has been changed from the current equipment procurement to the first phase of 2 million sets/year. A tire company in Qingdao, Shandong Province, originally planned to launch a second-stage expansion plan in June to form economies of scale. Recently, the company also announced that it will suspend the construction of the second phase of the project.

Tire special insurance has a certain impact on the rubber machinery industry. According to a rubber machinery manufacturer in Beijing that produces passenger tire molding machines, the company's molding machines have the phenomenon of customers delaying picking up or canceling orders. Guilin Rubber Machinery Factory introduced that after August basically did not receive semi-steel vulcanizing machine orders, indicating that China's semi-steel tire project will be in stagnation next year.

Tire special insurance has a certain impact on foreign companies such as Goodyear. Recently, Goodyear cancelled the qualifications of many large-scale Chinese agents, resulting in the accumulation of a large number of tires by provincial agents in Chongqing, Shanghai, Xi'an, Zhengzhou, Xinjiang, and Henan. According to the analysis, Goodyear changed its sales in disguise by changing its dealerships, mainly because the US tire special protection case affected the export of Chinese tires, which intensified domestic competition and caused tire price wars. According to reports, Goodyear tires have been forced to cut prices. In the end market, Goodyear tire prices have fallen by more than 20%. However, these foreign or Taiwan-funded enterprises are relatively less affected than state-owned tire companies. Because most of these companies have manufacturers overseas or in Taiwan, exporting to the United States through the transfer of production can reduce the impact of tyre special protection.

At present, China's tire companies are taking measures to reduce the impact, such as the production and supply of tires to other types of markets, increase sales in the domestic market, and supporting the auto manufacturers. However, “through the company’s own efforts, the company can only partially make up for the impact of the US special security case. Difficulties and declines in benefits are inevitable. We hope that government agencies at all levels can provide timely assistance, such as improving the domestic production of domestic auto companies. The proportion (excluding foreign investment), etc., to reduce the hazards of the special security case.” Said Yong Yong Zhi, a tire rubber company in South China.