Chinese tire factories still struggling in June

Chinese tire factory, Chinese tire manufacturer, Truck tire, Car tire, ORT tire, Radial tire, SUV tire

According to the news from the Financial Associated Press on June 2, the sluggish tire industry has ushered in some signs of improvement. Stimulated by policies such as resumption of work and stable growth in Shanghai, the tire industry is expected to recover strongly.

It has been learned from many sources that although the tire industry is showing signs of improvement, due to the current domestic demand is still relatively weak, and the cost pressure of high inventory and rising raw materials is still surrounding tire companies. Therefore, it is now predicted that the tire industry will become hot in the second half of the year. It’s too early.

According to the Financial Associated Press, a relevant person in charge of a tire in Shandong said, “At present, it is still difficult for companies to ship goods, and the recent intensive introduction of stable growth policies is expected to improve the degree of demand for the industry “at least until the second half of the year.”

In addition, Zhuo Chuang Information also stated that the operating rate of domestic tire companies in May increased slightly from April, but was still much lower than the same period last year. At present, the inventory of tires is still at a high level, and tire companies are not running smoothly. She said: “In the second quarter, the raw material costs of tire companies increased slightly from the previous quarter, but downstream demand was weak, and manufacturers were still struggling between raising prices and destocking.”

Inventory is high, and matching is also sluggish

News such as the policy of stabilizing growth and the resumption of work and production in Shanghai have made the market have strong expectations for the economic improvement in the third quarter, but the actual demand recovery is still slow.

The aforementioned person in charge of a tire in Shandong told the Financial Associated Press that the current downstream demand is still weak, and the demand for all-steel tires is even weaker. However, overseas demand is relatively strong, and the company’s overseas orders are relatively sufficient.

According to a survey conducted by Longzhong Information on 30 domestic large-scale tire enterprises, as of May 12, 2022, the operating rate of China’s all-steel tire sample enterprises was 60.20%, an increase of 18.66% month-on-month and a year-on-year decrease of 10.75%. The operating rate of semi-steel tire sample enterprises was 62.54%, up 17.41% month-on-month and down 3.70% year-on-year. “

Passenger car tire and Light truck tire Operating rate trend
Truck tire Operating rate trend

All-steel tires are mainly supplied to the matching and replacement markets for heavy trucks.

According to statistics, my country’s heavy truck market sold about 47,000 units in May, up 7% month-on-month and down 71% year-on-year. The 47,000 units were the lowest in May since 2007, and May this year was also the thirteenth consecutive month of decline in the heavy-duty truck market since May last year. From January to May 2022, the cumulative sales of the heavy truck market was 323,000 units, a decrease of 64% or 564,000 units from the 887,000 units in the same period of the previous year.

According to expert analysis, the reasons for the year-on-year decline in the heavy truck market and the unsatisfactory month-on-month increase in the heavy truck market in May are similar to those in April, mainly including the epidemic, economic slowdown, digestion of inventory, high oil prices, low freight rates and other factors.
Therefore, tire companies are in a dilemma.

It will take time for the market to reverse

It is understood that the State Council recently issued a policy of stabilizing the economy by reducing the purchase tax of some passenger vehicles by 60 billion yuan in stages.

Some analysts believe that it is expected that with the implementation of the automobile consumption promotion policy and the gradual easing of the epidemic, the domestic tire industry demand is expected to rebound rapidly.

Although domestic auto consumption and infrastructure recovery are expected to gradually pick up, the industry has also seen positive factors, but it has not been reflected in the market for the time being.

It is reported that the shipping price has been lowered, and the rising trend of raw material prices is no longer fierce.

Judging from the current export data, this year’s tire exports continued last year’s strength.

According to customs data, China’s tire exports from January to April 2022 are basically the same as in previous years, with a slight upward trend.

Such beautiful export data reflects the sluggish domestic tire market.

Here, we advises dealers and shop owners not to have too optimistic expectations in the short term. In the context of the recent increase in crude oil prices and the continued high level of raw materials, it is commendable that tire prices can stabilize.

Don’t hoard goods blindly. After all, under the current situation of repeated epidemics, no one knows what will happen tomorrow. Distributors and store owners should stock up rationally.

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