Highlights of China's Rubber Industry in 2011   

By Tang Yan, China Rubber Industry Association

1  Review of 2011

According to the National Bureau of Statistics data, in the first ten months of 2011, China's rubber industry achieved a total sales income of RMB589.218 billion, up 28.5% year on year (yoy); and a profit of RMB28.53 billion, up 16.8% yoy. From January to November, China's automobile tire output was 758 million pieces (pcs), up 8.5% yoy, including radial tires 359 million pcs, up 5.9% yoy.
   According to China Customs statistics, from January to November, China's export volume of automobile tires was 220 million pieces, up 5.8% yoy, with an export value of US$12.346 billion, up 34.8% yoy; motorcycle tires 22.463 million pcs, up 27.2% yoy, with an export value of US$272 million, up 60.0% yoy; bicycle tires 107 million pcs, up 4.8% yoy, with an export value of US$214 million, up 21.5% yoy; conveyor belts 204 000 tons, up 27.3% yoy, with an export value of US$696 million, up 46.8% yoy; hoses 138 000 tons, up 19.6% yoy, with an export value of US$576 million, up 29.0% yoy; and rubber shoes 4.079 billion pairs, up 0.1% yoy.

2. Highlights

* Booming investment

In 2011, investment in rubber projects in China remained very booming. In the first eleven months, China's rubber industry achieved a total of RMB104.93 billion of investment, up 35.3% yoy, but the number of new rubber projects fell by 0.4% over the previous year, indicating a growth in the scale of investment projects. Foreign investment was shifting from the field of passenger car tires to the field of all-steel truck radial tires, while domestic investment was extending from the field of truck tires into the field of passenger car tires.
   Double Coin Group Co Ltd invested in the construction of a 15 million pcs/a passenger car tire and light truck tire project in Wuwei, Anhui province. Hangzhou Zhongce Rubber Co Ltd invested RMB1.5 billion to construct a 10 million -12 million pcs/a premium radial tire project in Changzhou, Jiangsu province.
   Pirelli announced that within the next two years, it will invest 300 million euros to double the production capacity of its tire plant in Jining, Shandong province, to 10 million pcs a year. Japan's Toyo Tire & Rubber Company acquired Shandong Silverstone Luhe Rubber Tire Co Ltd and achieved its wish to supply truck and bus tires to its customers. Taiwan Cheng Shin Rubber Industry Co Ltd invested US$350 million to build a 2 million pcs/a all-steel truck radial tire production line at its plant in Kunshan, Jiangsu province.
   With the changes in domestic and international markets, some Chinese rubber companies start to invest overseas to seek international development. Hangzhou Zhongce Rubber Co Ltd invested RMB1 billion to build a tire plant in Thailand. Shandong Linglong Tire Co Ltd also invested in the construction of a 2 million pcs/a high-performance semi-steel radial tire project in Thailand. In addition, Guangdong Greatoo Molds Inc will build a tire mold base project in India; Sailun Tire Co Ltd announced to establish a wholly owned subsidiary in Vietnam; and CITIC Group will construct a 1.5 million pcs/a tire plant in Uzbekistan. Different from them, Triangle Tire Co Ltd signed a strategic cooperation agreement with the University of Akron to establish its first overseas R & D center - Triangle (USA) Tire Technology Center - in the United States. These moves show that China's rubber companies are shifting their focuses from quantity growth to quality improvement, trying to seek balanced development to meet the market demand and actively going overseas to participate in international market division and cooperation.

* Green manufacturing

Today, energy saving and emission reduction have become a fashion. It was reported that 20% of the energy consumed by cars is used to overcome the rolling resistance of tires. For commercial trucks, the proportion even reaches as high as 30%. Meanwhile, about 20% of the carbon dioxide emissions released by cars are caused by the tires. Thus, the use of green tires can help reduce energy consumption and waste emissions of cars. In the past year, China's rubber industry made unremitting efforts and achieved positive progress in the aspect. For example, last year, Chinese scientists and engineers successfully developed the low-temperature one-time rubber mixing process, which can reduce the power consumption per ton of rubber by about 20% and improve productivity by more than 200%. The technology has received widespread attention from tire producers. It uses high-performance synthetic rubber like solution-polymerized styrene-butadiene rubber (SSBR) for the production of tires. Such rubber can reduce the rolling resistance of tires and lower the fuel consumption of cars by 5% to 7%. The widespread use of green additives in rubber has also eliminated the production of toxic and hazardous substances in the production and use of rubber products, making the rubber products satisfy the requirements of foreign regulations and standards on imported rubber products.

* Dramatic ups and downs of rubber prices

In 2011, rubber prices in China experienced dramatic ups and downs. In March, rubber prices exceeded RMB40 000 /t. But in December, the prices fell below RMB30 000 /t. The rubber prices went up and down like a roller coaster. Reasons for this might be the extreme imbalance between rubber supply and demand, speculation, natural disasters and the intervention of the International Rubber Union. Because the violent fluctuation of rubber prices can lead to serious negative impacts on the rubber industry and related industries, industry insiders now call for necessary measures to keep rubber prices relatively stable.

* Quality scandal

In 2011, the tire quality scandal of Tianjin Kumho Tire Co Ltd pushed the company to the teeth of the storm. The scandal arose from that the company added recycled rubber into its tires. But from a professional point of view, the addition of recycled rubber into tires is not irrational. An indisputable fact is that due to vicious competition, tire companies now have to put more attention in fighting for market shares but less attention to their product quality, cost control and after-sales services. The scandal has rung an alarm to the whole rubber industry. Tire consumers in China are now looking forward to the implementation of the tire recall system as early as possible.