The tire industry is with excess capacity and the operations of tire enterprises are quite different.
An industrial analyst says the tire industry in China will show new features.
Industrial reshuffle
China’s key tire enterprises operated well since the beginning of this year, with their growth back to two-digit.
In the first five months, China’s key tire enterprises’ output valued totaled 73.64 billion yuan, up 10.70% year on year; and their sales revenue grew 10.66% to 68.09 billion yuan.
The increases in output value and sales revenue are related to growing output and prices.
An industry insider predicts that in 2017, China’s tire output will grow 4.1% from 2016.
Moreover, the export of tire industry is good.
In the first five months, China’s tire export rate was 34.09%, growing 3.3 percentage points from the 30.78% over the same period last year.
Severe excess in additional capacity
A number of domestic tire producers announced capacity expansion plans in the first half, with additional annual tire capacity over 50 million.
Currently, China’s tire capacity is in severe excess, the industry’s capacity utilization is only a bit more than 60%. Under such circumstances, some industrial leaders with higher capacity utilization and market reputation started to prepare for the future development after the industrial reshuffle.
Future of waste tires
Over the past few years, the amount of China’s waste tires grows 8%-10% each year. By 2020, the figure may reach 20 million tons.
To address the issue, six ministries issued a notification to rectify waste tire and other recycling sectors.
The authorities stress to promote scaled clean development of domestic waste recycling sector, and to encourage legitimate merger and reshuffle among recycling enterprises.
