Domestic Rubber Industry Looking for a Break in Adversity

By Tong Yan

In 2015, for China’s rubber industry, domestic demand dropped, overcapacity become more obvious and the output of major products declined. From January to November, 847 million pcs tires were produced, down 3% YoY, despite 128 radial tire enterprises making 565 million pcs tires, up 2.7% YoY, according to the National Bureau of Statistics. The output of motorcycle tires was 93.576 million pcs, down 1.8% YoY; the output of rubber shoes was 490 million pcs, up 16.4% YoY.   
From January to November, actual investment in the rubber industry amounted to RMB153.456 billion, up 0.3% YoY, according to the National Bureau of Statistics.
The 10.5 million pcs/a radial tire plant of Sumitomo Rubber (Hunan) Co., Ltd. passed governmental approval in 2015. The RMB1.538 billion plant is located in Xingsha industrial base, Changsha Economic Development Zone, Hunan province.
Hefei Wanli Tire Co., Ltd.’s 2 million pcs/a green radial heavy truck tire production project laid a foundation in June 2015. The project is funded at RMB2 billion by Guangzhou Fengli Tire Co., Ltd. and Anhui Jianghuai Automobile Co., Ltd.
Dalian Goodyear Phase III started construction, to expand the plant’s passenger car tire capacity to 2.08 million pcs/a.
In November, 2015, Continental Tire (China) Co., Ltd.’s Hefei phase III project broke ground, the total investment is RMB2 billion. The capacity will be 14 million pcs passenger car tires per year and 15 million pcs motor cycle tires per year.
In June 2015, Ningxia Dadi Circular Development Corp., Ltd.’s 20.1 million pcs/a radial tire project phase I finished construction, whose total investment is RMB8 billion. Annual production of radial tires is to be 2.4 million pcs.
In 2015, Jinhu Nanjing Factory moved to Nanjing Pukou economic development zone, the total investment was US$500 million.
In May 2015, the second production line of JianXin Tire (Fujian) Co., Ltd. was put into operation formally. The investment was RMB300 million, and the production of tires can reach 300 000 pcs per year.
In September 2015, Double Coin Holdings Ltd. plans to invest US$250 million for a factory in Jiangsu Rugao to increase truck and bus tire capacity, which will increase from 2.5 million pcs to 4.2 million pcs till 2018.
Meanwhile, Shandong Derui, Capital Tyre, Guangrao Wosen Rubber and Chongqing Jiatong all announced business failures, and Shandong Fulltour Tire and Shandong Chuanghua Tire both stopped production. Integration and recombination have become the new normal of adjusting industrial structure and resolving the overcapacity.
Domestic enterprises go out, build factories abroad and implement global strategies.
In 2015, Zhongce Rubber (Thailand) Co., Ltd. completed construction of a plant capable of making 5 million pcs car tires annually.
Linglong Tire’s project at its Thailand factory went into operation for a whole line of radial tires.
Qingdao Sentury Tire Co., Ltd.’s US$400 million, highly automated, intelligent and information-intensive factory in Thailand was completed.
Triangle Tyre Co., Ltd. built an America company in Nashville, echoing their north America technology center, realizing the development strategy of globalization.
Qingdao Doublestar Group and Kazakhstan TOO form a joint venture for constructing a tire production base in Kazakhstan.
China started to build a 500 000 pcs/a tire plant in Uzbekistan.  
Sailun Co., Ltd. invested nearly US$200 million to build a full-steel radial tire and off-road tire project in their Vietnam factory, targeting the international market.
Anhui Zhongding Holding (Group) Co., Ltd. acquired 100% share of Germany’s Wegu Holding Gmbh, the acquisition will enrich their production line and promote their overall strategy of becoming high-end and global.
Both import and export declined.
From January to November, the export of rubber products declined across the board, according to customs statistics. In specific, the export volume and value of passenger car tires fell 9.9% and 19.9%, respectively; heavy truck tires fell 1.4% and 15.4%; motorcycle tires fell 3.2% and 5.0%; bicycle tires fell 2.3% and 4.7%; adhesive tapes fell 7.8% and 13.1%; rubber hoses fell 10.1% and 7.5%; rubber shoes fell 6.3% and 4.0%.   
The Eurasian Economic Commission decided to levy a 14.79-35.35% anti-dumping tax on Chinese truck tire production for five years. Brazil decided to levy anti-dumping tax on Chinese truck tires for five years. Moreover, India took anti-dumping action against Chinese nylon cord and carbon black, and Latin America took anti-dumping action against Chinese shoes, which had a direct impact on China’s overseas markets.
In 2015, from January to November, 2.43 million tons of natural rubber was imported, up 4.7% YoY; 1.753 million tons of synthetic rubber was imported, up 25.5% YoY. A national standard for compound rubber was implemented on July 1, 2015. In the second half, the import volume fell quickly. From January to November, the import volume was down 46.7% YoY.  
For China’s rubber industry, after rapid development, the year of 2016 will still be a time of deep adjustment and transformation. As the government keeps promoting urbanization-related construction and increasing investment in infrastructure, the rubber industry still has a large market. Differentiated development will play an important role in the current transformation and development. For example, while for China’s rubber industry rubber export volumes fell across the board, agricultural rubber tire exports increased more than 20%.