◎ Chen Weifang
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In 2018, the main economic indicators of China’s rubber machinery industry unexpectedly drop sharply. The data in the first half of 2019 has been revised and improved, mingling hope and worry. The hope is that the sales revenue has achieved double-digit growth, and the export delivery value has risen sharply. The worry is that the industry profits have fallen sharply. |
Judging from the current orders of rubber machinery enterprises, the domestic demands in the second half of the year and next year are unprecedented low, and it is difficult to say the industry situation could tend to a good prospect, but the yearly export delivery value is expected to grow.
Enterprises with Decrease Increase, and Income Still Grows in Double-digit
According to the statistics of 20 major rubber machinery manufacturers in China by the Rubber Machinery Professional Committee of China Chemical Equipment Association, the sales volume in the first half of the year is RMB 3.48 Billion Yuan, with an increase of 11.5% (compared with the same period of the previous year, and the same below). Based on this, it is calculated that the total sales volume of China’s rubber machinery industry in the first half of the year has reached RMB 4.62 Billion Yuan, with an increase of 9.7%.
The main reasons for the increase in sales revenue include, firstly, the increase in export volume; secondly, the digest of inventory in the previous year; and thirdly, the low sales base of the previous year.
In the first half of the year, the production of domestic rubber machinery enterprises is not balanced. Except for few enterprises such as MESNAC, Dalian Rubber & Plastics, etc., the production tasks of most enterprises are not saturated, and the industry operating rate is around 70%. The number of enterprises whose sales revenue has increased and that of enterprises whose sales revenue has declined are equivalent, and the number of enterprises with declining income is so large that it has been rare in recent years. Enterprises with large sales revenue growth include Guilin Lihao, Dalian Rubber & Plastics, Guilin Engineering Company, and MESNAC.
The sales revenue of top ten enterprises totals RMB 3.385 Billion Yuan, accounting for 73.3% of the total sales revenue, and the industry concentration has increased by 6.5 percentage points. The phenomenon is obvious that the stronger becomes much stronger.
From the perspective of product contribution, the growth rate of rubber machinery enterprises mainly based on tire machinery is small or is mainly decreased. Relatively speaking, the production and orders of rubber machinery enterprises mainly based on non-tire rubber machinery are sated, and the sales volume is mainly increased. In tire equipment, the demand for OTR equipment is better than that for passenger tire and truck tire equipment.
Competition is Intense and Profitability is Unsatisfactory
According to statistics of enterprises participating in the report, the profit of the first half of the year falls by 35.5%, and the profitability of the industry is not satisfactory. There are three loss-making enterprises with a large amount of loss.
The main reason for the decline in industry profits is the reduction in orders, which has led to a relatively low level of product price due to fierce competition. Fortunately, prices of raw materials such as steel are moderate.
According to another statistics, the output value of new products is basically the same. The number of employees in the industry continues declining, and the main driving force is the improvement of degree of production automation and level.
The production and sales rate decreases, the inventory increases, and a limited number of orders are fierce in competition. It is predicted that it is difficult for the profit level of rubber machinery industry in the second half of the year to be greatly improved.
Promoted by Overseas Projects, Export Delivery Value Increased Substantially
According to the statistics of enterprises participating in the report, the export delivery value of rubber machinery in the first half of the year realizes RMB 491 Million Yuan, with a substantial increase of 36.7%, and the export delivery rate (value) is 15.2%, with an increase of 3.1 percentage points. It is estimated that the total export delivery value of rubber machinery in the first half of the year is USD 100 Million, with an increase of 38.9%.
Enterprises with good export delivery value include MESNAC, Tianjin Saixiang, Dalian Rubber & Plastics, Yiyang Rubber & Plastics, Guilin Rubber Machinery, Sichuan Yaxi, Huaxiang Autocontrol, Guilin Engineering Company and Shaoxing Jingcheng.
The United States and Europe have implemented “anti-dumping and anti-bribery” on China’s tires, and the United States has continuously upgraded trade war against China. These speed up the progress of China’s tire enterprises to build factories overseas. Projects recently launched include Thailand Project of Pulin Chengshan Tire, Malaysia Project of Haodi Tire, Pakistan Project of L & M, Vietnam Project and Sri Lanka Project of Sailun, etc. These will generate a large number of orders, which will greatly promote the export of China’s rubber machinery.
From the perspective of global market, the investment from internationally renowned tire companies is relatively active. The new round of tire investment is undercurrent. The main players include not only the world tire giants, but also a large number of small and medium-sized tire enterprises, especially Indian tire enterprises, which are increasing their tire investment. This provides China’s rubber machinery exports with opportunities.
Based on the above factors, it is predicted that China’s rubber machinery exports will continue improving in the second half of 2019, and the annual export delivery value is expected to achieve growth.
