China's tire industry has entered a "slight growth" era since 2012. During the first half of this year, the tire output continued to grow slightly, sales revenue had a negative growth, foreign exchange earning through exports declined, and the economic benefit was relatively good. According to the statistics on 46 major tire enterprises from China Rubber Industry Association Tire Branch, tire production increased by 6.7% over the previous year on a year-on-year basis (the same below), sales revenue fell 1.6%, and export delivery value fell 2.1%. Profit grew by 23.5% substantially, but the growth fell faster, dropping 22.6 percentage points. The tire inventory appeared a growth of 6.8%, which was in a high inventory level.

46 tire enterprises’ sales revenue reached 99.98 billion yuan, and the total output of tire was 174 million sets, of which radial tire reached 154 million sets, with a radial rate of 88.7%, increasing by 1.2 percentage points, and the radial rate continued to hit new high. The growth of tire production and sales revenue showed a greater difference between domestic and foreign-funded enterprises. All indicators of domestic enterprises enjoyed positive growth, but major indicators of foreign-funded enterprises, in addition to essentially flat tire production, had negative growth. The number of enterprises with falling sales revenue was 29, accounting for 63% of the total, and 7 of the top ten enterprises dropped. Only 8 enterprises with sales revenue growth reaching 10% or more were listed successively as follows: Shandong Taishan, Wendeng Sanfeng, Jinyu Group, Yanchang Rubber, Sichuan Haida, Xinjiang Kunlun, Triangle Group and Shandong Shengtai, and no large-scaled tire enterprises entered the top five in terms of growth. The top ten enterprises in terms of tire sales revenue were listed successively as follows: Hangzhou Zhongce, Triangle Group, Giti Tire, Cheng Shin Tire, Shandong Linglong, Xingyuan Tire, Double Coin Holdings Ltd., Jinyu Group, Aeolus Tire and Cooper Chengshan. Among the top ten enterprises, only Triangle Group grew at a rate of over 10%. 

The top ten enterprises in terms of tire production were: Giti Tire, Hangzhou Zhongce, Shandong Linglong, Cheng Shin Tire, Triangle Group, Jinyu Group, Sailun Company, Cooper Chengshan, Guangzhou Huanan, and Michelin (China). Among the top ten, 5 enterprises declined in output, and the others increased. 

All-steel truck tire production totaled 42.16 million sets, with an increase of 5.8%. The top ten enterprises in terms of all-steel tire production were: Hangzhou Zhongce, Double Coin Holdings Ltd., Triangle Group, Giti Tire, Shandong Linglong, Aeolus Tire, Xingyuan Tire, Cooper Chengshan, Sailun Company and Qingdao Double Star. The all-steel tire production of these 10 enterprises reached 27.9 million sets, accounting for 66.2% of total production, increasing by 1.7 percentage points, and the all-steel tire had a relatively high degree of concentration. Calculated on the annual output of 130 million sets of all-steel truck tire in our country, in the first half year, all-steel tire operating rate was about 85%. 

The production of semi-steel passenger vehicle tire and light truck tire totaled 113 million sets, with an increase of 9.1%, which showed that in recent years, China’s semi-steel tire developed well relatively. The top ten enterprises in terms of semi-steel tire production were Giti Tire, Shandong Linglong, Hangzhou Zhongce, Cheng Shin Tire, Triangle Group, Jinyu Group, Michelin (China), Guangzhou Huanan, Sailun Company and Nanjing Kumho. These 10 companies’ total production was 78.43 million sets, accounting for 69.3% of total production, and the industry concentration dropped by nearly 6 percentage points compared with last year, which showed that there were more new projects of semi-steel tire in China, reducing the semi-steel tire industry concentration. 

Tire exports maintained growth, with an increase of 4.7%. Among them, the radial tire export volume grew by 7.8%, but the export delivery value had a negative growth of 2%, which is a rare phenomenon in recent years. Negative growth in export delivery value was mainly due to substantial reduction in tire export prices caused by falling raw material costs. No matter what the reason was, after all, such a phenomenon should arouse the attention of China's tire industry and we should be on guard against anti-dumping abroad. The export situation of domestic enterprises was better than that of foreign-funded enterprises, 33 domestic enterprises’ tire exports grew by 10.4%, and 13 foreign-funded enterprises’ exports dropped by 4.6%, indicating that while China's tire enterprises are in an effort to expand exports, foreign-funded ones are opening up tire market vigorously in our country. The contribution rate of tire exports to tire sales revenue in China was 34.2%, of which 12 enterprises’ export delivery value accounted for over 50% of sales revenue, and over 90% of sales revenue from 3 enterprises depended on exports, indicating that China's tire industry has a relatively high degree in foreign-trade dependence, and prosperity index associates with the world economic situation to a greater degree. The top ten enterprises in terms of export delivery value were as follows: Giti Tire, Hangzhou Zhongce, Triangle Group, Shandong Linglong, Jinyu Group, Xingyuan Tire, Sailun Company, Double Coin Holdings Ltd., Cooper Chengshan and Aeolus Tire. In terms of region, Shandong, Jiangsu and other provinces took the lead. 

In addition, the tire inventory was at a relatively high level. 46 tire enterprises inventory totaled up to 18 billion yuan, increasing by 6.8%. The inventory of domestic enterprises was significantly higher than that of the foreign-funded enterprises, 33 domestic enterprises’ tire inventories increasing by 9.6%, 13 foreign-funded enterprises decreasing by 1.3%. The reasons of inventory increasing are as follows: firstly, the demand in tire market is insufficient; and secondly, the current rubber price is relatively low, and a number of tire enterprises have chosen the strategy to increase the output and the inventory, which is an obvious phenomenon in domestic enterprises. The number of enterprises with increasing inventories reached 26, accounting for 57% of the total number, of which 6 enterprises increased by 50% or more in inventories. Industry-wide inventory accounted for 18.6% of the total sales revenue, and 5 companies’ inventories accounted for more than 50% of sales revenue. They undertook the greater operational risk, which posed a big pressure on tire sales in the second half year. The 10 companies with the lowest inventory rate are: Yoko Hama, Jiangsu Feichi, Wendeng Sanfeng, Nankang Rubber, Triangle Group, Jiangsu Hankook, Cheng Shin Tire, Bridgestone (Tianjin), Xingyuan Tire and Hangzhou Zhongce. The top 10 companies in terms of inventory rate are: Guilin Shuguang Rubber Industry Research & Design Institute, Xinjiang Kunlun, Qingdao Yellow Sea, Yanchang Rubber, Good Friend Tire, Guilin Tire, Bayi Tire, Jinyu Group, Sichuan Haida and Tianjin Union Rubber. In terms of products, OTR tire, especially giant OTR tire’s inventory is relatively large, and the sales situation is unsatisfactory.

In the first half year, the biggest highlight in tire industry is the better economic benefit. The total profit growth of 46 tire enterprises increased by 23.5%, and profits and taxes grew by 19.3%. Rubber prices fell during the first half of this year about 25% and tire price decreased by about 10%, improving the profitability of the tire enterprises. From January 1, 2013, China's NR import tariff reduced by 800 yuan/ton over 2012, which made contributions to efficiency enhancement of China’s tire enterprises. But our tire enterprises are not strong in bargaining power, tire prices show lower trend and the growth of profits and profits and taxes show a significant decline trend.

There was a substantial increase in tire investment. After the Spring Festival, tire investment in China reached a relatively high tide, and some old tire plants continued to expand the scale, with a number of new tire projects coming into operation. According to the rough estimation, this tire investment will make the annual production capacity of all-steel truck tire reach 20 million sets or more, and the annual production capacity of semi-steel passenger tire 100 million sets or more. At present, in the circumstance of obvious structural surplus of our tires, the tire industry should think over the blind investment prudently.