China's tire industry shows signs of improvement

　　The economic operation of China's tire industry is currently showing clear signs of stabilization and improvement. According to the economic indicators statistics of 41 major tire production enterprises by the Tire Branch of the China Rubber Industry Association, both tire production and sales revenue turned positive in September, marking the first time since 2014. Tire companies have seen a significant decrease in inventory and a year-on-year increase in profits. The only downside is that the export delivery volume and value have decreased due to factors such as the US' anti-dumping and countervailing policies. However, in the context of a decline in exports, the improvement of the above indicators indicates a clear positive trend in the current tire situation.

　　Industry operation data is improving

　　The signs of improvement in the tire industry can be clearly seen from the statistics of the Tire Branch. As of the end of September, 41 major tire companies produced 275 million tires, a year-on-year increase of 5.58%, with radial tires growing by 6.99%. The majority of companies participating in the report showed an increase in production, with only 3 out of the top 10 companies experiencing a decrease in production. Tire sales revenue was 110.2 billion yuan, with only a slight increase of 0.05%, but this was achieved despite a significant decline in tire prices and exports. It is also the first positive growth in sales revenue in China's tire industry in three years, which is not easy. Inventory was 14.38 billion yuan, a decrease of 14.8%. The export delivery volume was 118 million pieces, a decrease of 1.72%; The export delivery value was 38.41 billion yuan, a decrease of 7.99%. The average operating rate of the entire industry is about 70% for all steel tires and 73% for semi steel tires.

　　The relevant market performance is improving

　　The main driving force for the improvement of the tire industry is the rapid development of China's automobile industry and the gradual recovery of the transportation industry. China has implemented policies such as reducing or exempting automobile purchase taxes, and the demand for sedans has always been strong. According to data released by the China Association of Automobile Manufacturers, in October, China's automobile production and sales were 2.586 million and 2.65 million respectively, an increase of 2.19% and 3.35% month on month, and an increase of 18.15% and 19.29% year-on-year; From January to October, the cumulative production and sales of automobiles in China were 22.016 million and 22.0172 million respectively, an increase of 13.79% and 13.83%. The automotive industry is improving, resulting in a significant rigid demand for the original tire market.

　　In order to stimulate the domestic economy, on August 18th, the Ministry of Transport and the Ministry of Public Security jointly issued a notice on the issuance of the "Special Action Plan for Rectifying Illegal Overloading and Overloading Behaviors of Highway Trucks". The two departments will carry out special rectification actions from today onwards, unify the law enforcement standards for overloading and overloading, and severely crack down on prominent illegal behaviors such as illegal overloading and forced overloading of highway trucks. The prosperity of China's transportation industry has greatly improved, and the demand for heavy-duty tires in the replacement tire market has increased significantly. In addition, due to the "double reverse" investigation conducted by the United States on China's heavy-duty tires, tire companies increased their export volume before the final ruling of the "double reverse"; When rubber prices are at the bottom, tire factories are more willing to produce more. Multiple factors have driven the increase in demand for tires, and the motivation for enterprises to increase tire production has increased, resulting in the current trend of higher tire operating rates in China.

　　Tire prices stop falling and stabilize

　　Another major sign of the improvement in the tire industry is the stabilization of tire prices. Due to the continuous decline in rubber prices for many years, tire prices continue to decline. After entering October, tire prices in China have significantly stopped falling, and a considerable number of companies have announced price increases. Zhengfeng Tire announced a price increase of 4% to 6%, Shuangxi Tire announced a price increase of 2.5% to 5.5%, Wanda announced a price increase of 3% to 6%, and Haoyu announced a price increase of 2% to 3%. Most of these price increases were implemented on November 15th. At the same time, some tire companies that have not announced price increases have cancelled their promotional activities, such as year-end rebates. It is not difficult to find that dealers in various places have increased their inventory levels and entered the stage of buying up thinking, while tire companies' inventory is rapidly decreasing.

　　According to relevant statistics, the comprehensive price index of Chinese car tire dealers in October was 68.14, a month on month increase of 1.04% and a year-on-year decrease of 2.2%. Michelin's market prices have shown a significant increase, while Magis and Bridgestone's market prices have slightly increased. Pirelli, Chaoyang, Jiatong, Michelin, and Yokohama's prices have slightly decreased, while Dunlop, Goodyear, and Hankook's prices have remained stable. The comprehensive price index of truck and bus tire dealers in October was 61.29, a decrease of 0.10% compared to the previous month. The price index of truck and bus tire dealers remained stable, while the price index of foreign brands Hankook and Michelin remained stable, and the price index of Bridgestone slightly fell; The price index of domestic brands Chaoyang, Fengshen, Qianjin, Jia'an, Shuangqian, and Zhengxin remained stable on a month on month basis.

　　Tire companies are making money. Due to the low rubber prices at the beginning of the year, the profit margin of tires sold this year is generally high. Pulin Chengshan's profit in the first three quarters was over 300 million yuan, and it is expected to reach over 400 million yuan for the whole year. The company's cash flow is very good. A considerable number of tire companies have seen year-on-year growth in their profit indicators. The operating profit margin of Sailun Jinyu in the first three quarters was 4.55%, and the product gross profit margin was 19.76%, both of which were at a relatively high level.

　　Overseas investment heat rises

　　Tire companies are starting to make returns on overseas projects. The proportion of data from Senqilin Thailand is as follows: comprehensive tire production accounts for 23.91%, export value accounts for 26.97%, and tire sales revenue accounts for 23.59%. The production of Sailun Jinyu in Vietnam reached 3.881 million pieces, accounting for 20.5% of the total; The production volume of Shandong Linglong (Thailand) reached 5.428 million pieces, accounting for 21.3% of the total. The contribution of overseas factories has effectively buffered the impact of the US "double reverse" on China's tire industry.

　　The investment of tire enterprises has improved. The enthusiasm for tire investment in our country has slightly improved compared to last year. Although there have been no new projects, expansion and filling projects have emerged one after another, mainly including Chaoyang Langma, Shandong Huasheng, Shandong Yinbao, etc. Shandong has approved the Haohua 2 million all steel tire project, which is expected to start soon. It should be said that there is a lack of enthusiasm for domestic investment in tires in China, but overseas investment is a different landscape. The United States has set a good example for China's "double reverse" of all steel tires and the construction of overseas factories for Chinese tires, accelerating the trend of tire companies building factories overseas and forming a small investment boom. There were already 5 overseas tire investment projects before the New Year, and since the beginning of this year, some manufacturers have planned overseas investments. The main projects include Linglong Tire's overseas acquisition project, Senqilin's US project, Wanli Group's US project, Zhaoqing Xindi Tire's Vietnam project, and Sailun Jinyu's Vietnam all steel tire expansion project. Recently, there have been reports of Pulin Chengshan, Wanda Tire, and Huasheng Tire building factories abroad. In the second half of the year, there was a significant increase in orders in China's rubber machinery industry, mainly due to the contribution of overseas investment in Chinese tires. Linglong Tire, Triangle Tire, Jiangsu General Motors and other companies have successively gone public to alleviate financial pressure. All three companies are planning some technological transformation projects, which have a positive effect on related industries such as rubber machinery.

　　Shi Yifeng, Secretary General of the Tire Branch of the China Rubber Association, said that based on current statistical data, the main indicators of the tire industry are better looking, but it cannot be determined whether the tire industry has truly entered a V-shaped reversal. The structural surplus in China's tire industry is still evident, and the United States has not yet implemented the "double reverse" policy towards China's all steel tires. Tire prices are only showing signs of stabilizing, and the effectiveness of recent price increases announced by some tire companies remains to be observed.