Yang Honghui

"In 2020, the domestic tire market gradually improved with the support of the national policy of starting internal and external dual circulation. Especially in the second half year, the domestic epidemic prevention and control effectiveness was awesome, and the effect of the internal circular stimulation policy was obvious, especially for the OEM market of TBR and OTR tires, the domestic infrastructure construction started to increase, the logistics transportation gradually recovered, the tire domestic OEM and maintenance replacement market has improved significantly.

On January 12, at the online 39th General Secretaries Meeting of China Rubber Industry Association, Shi Yifeng, Secretary General of CRIA Tire Branch, analyzed the operation of China tire industry in 2020.

Total production in the first 11 months shows growth for the first time

According to statistics of key member enterprises by Tire Branch of CRIA, from January to November 2020, the output of domestic automobile tires was 394 million pieces, with a year-on-year (the same below) growth of 1.07%. The cumulative output of that year showed a positive growth for the first time. Among them, the total full-steel tire output was 97 million, up 3.23%; the semi-steel tire output was 273 million, down 0.16%. In particular, since the second half of the year, the monthly tire production has shown double-digit growth.

In addition, the sales volume of all auto tires increased by 1.04%, the sales revenue decreased by 2.35%, the export delivery volume decreased by 6.62%, the export delivery value decreased by 8.99%, and the tire inventory decreased by 9.69%.

Truck tire becomes market highlight

In 2020, China's auto market gradually improved, and the annual decline of auto production and sales narrowed to less than 2%. In December, automobile production and sales increased by 9.8% and 12.7% respectively, showing positive growth for nine consecutive months, and sales growth remained above 10% for seven consecutive months, of which commercial vehicle production and sales set a new record for nine consecutive months.

According to the preliminary estimation of the tire branch, from January to November 2020, there was an increase of about 6.55 million TBR tires for OEM. This is mainly due to a 51% increase in the output of semi-trailer tractors and an increase of about 2.7 million OEM tires; a 42% increase in the output of incomplete heavy trucks and an increase of about 1.4 million OEM tires. Due to the decline of passenger cars production, the output of PCR tires decreased by 7.2 million from January to November. Overall, the truck tire OEM market has become a bright spot in 2020.

In addition, from January to November 2020, China's highway freight volume decreased by 1.2%, and freight turnover decreased by 0.1%; highway passenger volume dropped by 47.6%, and passenger turnover dropped by 48%. According to the market survey, the recovery of the repair and replacement market was steady, in which the condition of TBR tires was better than that of PCR tires.

The fluctuation of export market tends to be stable and good

Shi Yifeng introduced that in early 2020, the tire production and sales volume and export volume decreased slightly, mainly affected by the factors of New Year’s Day and Spring Festival; the domestic epidemic broke out from February to March, and the production was paused, which had a huge impact on tires export. However, some leading enterprises in the eastern coast gave full play to their location advantages and management advantages. In March, the export volume of TBR tires increased by 3.5%, and that of PCR tires increased by 4.8%; after that, the global epidemic spreaded, resulting in a 60-70% precipitous drop in export orders. In April, the export volume of TBR tires decreased by 31.5%, while that of PCR tires decreased by 43.6%; in May, the domestic situation began to improve, but the export was still difficult. Although the export volume of TBR increased by 2.8%, the PCR still decreased by 1.7%.

In the second half of 2020, the overall situation of tire export was stable and good. According to customs statistics, from January to November, the decline of automobile tire export volume narrowed by nearly 15.8 percentage points compared with the first half of the year. Among them, the export volume of TBR tires decreased by 2.1% and that of PCR tires by 7.5%. Although it is difficult to obtain one container for export and the export freight is soaring, the overall export situation is still gradually improving, and the export of TBR tires is better than that of PCR tires.

Tire price increases and benefits improve

According to Shi Yifeng, in 2020, domestic tire production and efficiency steadily improved. The sales profit margin of tire industry increased from 2.92% in the first quarter to 5.98% in the third quarter, and the loss of enterprises decreased from 31.4% in the first quarter to 17.1% in the third quarter, but the total amount of loss still increased by 38.4%.

Shi Yifeng analyzed the main reasons for the better overall profit of the tire industry in 2020. Firstly, the capacity utilization rate of the industry as a whole (especially large enterprises) was better released. Secondly, the prices of raw materials were stable and at a low level for most of the year. Thirdly, the contribution of going-out tire enterprises was greater than that of domestic enterprises. Fourthly, with the rise of raw material prices at the end of the year, some tire prices begun to adjust. But at the same time, the differentiation of tire enterprises was intensifying, the good is getting better and better, the problem enterprises are becoming more and more difficult, and the loss of loss-making enterprises is increasing.

Tire production is expected to increase in 2021

According to Shi Yifeng's analysis, China's economic operation will remain in a reasonable range in 2021, the tire industry will continue to maintain a stable recovery growth, and the output of auto tires is expected to increase by more than 3%. However, the impact of the epidemic and many uncertainties in the external environment can not be underestimated, especially the fluctuation and rise of raw material supply and prices. If the fluctuation is severe, it will bring great pressure on the production, capital turnover and profitability of tire enterprises.

Shi Yifeng stressed that the tire enterprises should adhere to the market orientation, the general tone of seeking progress while maintaining stability, adhere to the new development concept, seriously grasp the domestic big cycle as the main body, and promote each other with domestic and foreign double cycles, so as to unswervingly achieve high-quality development.