Tire exports have risen sharply but companies are still losing money

The latest statistics from Guangzhou Customs show that from January to July this year, Guangdong exported 25.966 million tires, an increase of nearly 20% year-on-year; and from a national point of view, the export growth even reached 30% in the first half of this year. However, behind an oasis, the hardships have not yet arrived.

Exports grow but profit drops

According to the latest statistics from Guangzhou Customs, as of the end of July this year, Guangdong exported 25.966 million tires, an increase of 19.8% year-on-year; export value was US$320 million, a year-on-year increase of 25.4%.

The national data performance is more eye-catching. According to relevant data, during the first half of this year, a total of 86.679 million automobile tires were exported, which was a year-on-year increase of 30%; the value of export delivery was US$3.968 billion, an increase of 37.8% year-on-year.

“The reason for the increase in the volume of tire exports in the first seven months of this year in Guangdong was mainly due to the gradual recovery of the global economy.” Chang Yingzhi, a researcher with CIC Advisor Chemical Industry, analyzed in an interview with a reporter from the “Daily Economic News”.

However, good-looking export data does not conceal the reality of the decline or even loss of profits of tire companies. In the listed companies of tires in Shanghai and Shenzhen, most companies have a negative net profit growth in the middle of the year, and some companies even have huge losses. For example, the net profit of Qingdao Double Star (000599, SZ) for the first half of the year was RMB 109.816 million, and the growth rate of net profit was -91.39%; the net profit of First Tire A (000589, SZ) for the first half of the year was 75.927 million, and the growth rate of net profit was -32.35%. .

According to relevant department statistics, from January to May of this year, the national tire company's profit rate was only 4.01%.

A variety of pressure test tire companies

China National Rubber Industry Association tire branch (hereinafter referred to as "tire branch") said that the current tire industry already has excess capacity and excess product structure. All-steel truck tires are expected to exceed 90 million vehicles this year, nearly twice the “Eleventh Five-Year” tire development plan, and more than double the domestic demand forecast for 2010. In addition, according to statistics from the tire branch, in the first half of this year, tire inventory increased by 57.7% year-on-year, inventory growth has been significantly higher than the increase in output, output value and sales revenue, and is on the rise.

If the market is not completely heading for good conditions, the excessive expansion of production capacity will undoubtedly exacerbate competition, and the rise in tire raw materials such as natural rubber will become another “best spell” for tire companies.

At present, 70% of China's natural rubber imports rely on imports, while import prices rose from 1459.3 US dollars per tonne in August last year to 2428.4 U.S. dollars in April this year. Domestic natural rubber prices have also increased significantly. “Largely increased the cost of tire companies. While domestic tires have overcapacity, making home-made tires have limited room for price increases. It is expected that the profitability of domestic tire companies will decline in the second half of this year,” Chang said.

While China’s tire exports have maintained rapid growth, hidden risks of new trade friction are also hidden. Chang Yongzhi stated that at present, China’s tire exports have been challenged by trade barriers, technical barriers, and environmental protection barriers. In addition to the United States, more than a dozen countries and regions, including the European Union, Brazil, Argentina, and India, also submitted anti-dumping and countervailing investigations to Chinese tire exporters.