China's tire market runs weak profit margins from January to August

According to the statistics of China Rubber Industry Association Tire Branch, from January to August of 2015, 44 key member companies completed the current tire production value of 118.338 billion yuan, a year-on-year decrease of 13.04%; and the tire sales revenue was 106.916 billion yuan, a year-on-year decrease of 12.70%.

China's tire market runs from January to August
China's tire market runs from January to August

From the perspective of specific products, the output of comprehensive tires was 237,070,700 pieces, a year-on-year decrease of 6.33%. Among them, the production of radial tires was 213,751,600, a year-on-year decrease of 5.84%; the production of all-steel radial tires was 5,603,004, a year-on-year decrease of 5.96%; and the radialization rate was 90.16%.

From the export perspective, the whole industry completed the export of tire delivery value of 37.866 billion yuan, a year-on-year decrease of 15.38%; exports of tire delivery 105.158 million units, a year-on-year decrease of 8.18%, of which exports 986.7828 million sets of radial tires, down 6.37%.

The industry achieved a profit of 3.537 billion yuan, a year-on-year decrease of 36.42%. Inventory of 18.571 billion yuan, an increase of 7.95%, an increase of 6.65%.

Profit growth rate is as low as -36.42%

Judging from the comparative analysis of comprehensive tire output, export tire delivery, sales revenue, and total profit, the growth rate of major indicators in the domestic rubber industry showed negative growth from January to August in 2015. Among them, the increase in total profit realized was low. -36.42%.

As a whole, the Chinese tire market in 2015 was significantly weaker than in 2014.

Monthly sales revenue is reduced

In January-August 2015, China's tire sales revenue decreased from January to August 2014. On the whole, in addition to January, from February to August, the sales growth rate of the tire market nationwide remained at -12% to -16%, which is inextricably linked with the tire export situation.

At present, the domestic tire market is hindered from being sold abroad, domestic sales are oversupplied, and the company’s sales pressure is high. Therefore, in the short term, the sales revenue of the tire market is unlikely to change significantly.

Product prices are low

From January to August 2015, the total profit growth of China's tire industry was basically between -30% and -55%. Then, whether the production enterprises are still “profitable”? Because of the lack of downstream demand, companies are rushing to promote low-cost promotions to normal, which has led to a gradual reduction in the profitability of tire companies.

In addition, the United States' "double reaction" has also exacerbated the situation of oversupply of Chinese tires. At present, the high inventory level, the pressure of shipping companies, and the low selling price are the basic conditions for the Chinese tire market.

Basic negative growth in output

From January to August of 2015, the growth rate of domestic comprehensive tire production was not optimistic. Except that it was positive growth in January, it fell below 0 point from February to August. Affected by the continued weakness in downstream demand, tire companies have to follow the market, reduce production, reduce their own sales pressure and inventory pressure.

The volume of exports fell

From January to August of 2015, the monthly increase of China's export tire delivery volume was negative. At present, China's tire export market is falling in volume and price. On the one hand, the United States' "double opposition" has caused China to lose nearly 40% of its export market. On the other hand, the fall in raw material prices has weakened the cost of tires.

At present, Chinese tire companies use the EU as their main export market to compete for more market share. A price war is inevitable. Industry insiders worry that it will be difficult for tire companies to insist on long-term maintenance of low-end prices, and may even face EU anti-dumping risks.

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