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Exports of Chinese Tire Industry Are Not Very Promising in 2009

www.shcri.com In April 2009, the tire yields in China were increased by 13.7% to 58.15 million stripes compared with the same period of last year. During January to April of 2009, the total tire yields were 185.6 million stripes in China, up by 0.2% YOY. The increases of the tire yields largely attribute to the ease of obtaining loans, the pursuit of high operation rate and the blind optimistic to the economic tendency. By contrast to the promising production situation of Chinese tire industry, the exports are not very promising.

 

During January to April of 2009, China totally exported 81.31 million stripes of tires, valuing 2.01 billion USD, down by 23.3% and 21% respectively compared with the same period of 2008, in which the exports in April were 23.16 million stripes, down by 19.2% and valuing 580 million USD, down by 16.1%.

 

China’s tire exports are mainly characterized as follows:

1. The monthly exports volumes were rising. In July 2008, the monthly tire export volumes broke through 30 million strips in China, the highest point since January 2008. In the later successive seven months, the exports cut down and showed the obvious growth in March 2009. In April, the export volumes continued to keep above 23 million stripes. The actual exports amounted to 23.16 million stripes, down by 19.2% YOY and holding the line at link relative ratio compared with March 2009.

 

2. Over 80% tires were for the export processing trade and the general trade was cut down obviously. From January to April, China exported 67.46 million stripes of tires by means of processing trade, decreased by 21% and accounting for 82.9% of the total tire export volumes of the same period in China. At the same time, China exported 13.03 million stripes of tires by means of general trade, down by 34.9% and accounting for 16%.

 

3. The major export destinations were America, Europe and Africa. From January to April, China respectively exported 21.08 million, 16.34 million and 10.44 million stripes of tires to America, Europe and Africa, down by 25.7%, 20.9% and 18.8%, in which the total export volumes accounted for 58.8% of the total tire export volumes of the same period.

 

4. The foreign funded enterprises showed the largest reduction rate. From January to April, the foreign funded enterprises exported 46.35 million stripes of tires, down by 27.6% and 4.3 percentage points higher than the general export reduction rate of the same period in China, but accounting for 56.9% of the total tire export volumes in the same period in China.

 

5. The exports of the new inflatable rubber tires for the motor vehicles accounted for near 40%. From January to April, China exported 31.55 million stripes of new inflatable rubber tires for the motor vehicles, down by 12% and accounting for 38.8% of the total export volumes. The exports of the new inflatable rubber tires for the bicycles were 22.02 million stripes, down by 35.9% and accounting for 27%. Besides, the exports of the new inflatable rubber tires for the passenger vehicles and cargo trucks amounted to 9.54 million stripes, down by 30.9% and accounting for 11.7%.

 

Affected by the international financial crisis, the automobile consumption was cut down obviously in the international market in 2009 and the sales volumes continued to drop. The depressed demands in the downstream led to the fast shrink of the demands for the tires in the international market. Taking America for example, according to the statistics released in 1st May, 2009, the automobile sales were cut down by 34.4% YOY in April 2009 and reached the bottom low over the past 30 years, which was the successive sales decline for 18 months. At the same period, the sales amounts of Chrysler, General Motors and Fort were cut down by 48%, 34% and 32% respectively. Besides, the drivers also cut down the travel plans, which also cut down the torn of the tires, postponed the performance of the tires and reduced the replacement of the tires.

 

From January to May of 2009, China produced 4.8377 million automobiles and sold 4.9568 million automobiles, up by 11.10% and 14.29% YOY respectively. The yields and sales of the passenger vehicles were 3.52003 million and 3.6609 million, up by 15.61% and 21.20% YOY respectively. The yields and sales of the commercial vehicles reached 1.3174 million and 1.2959 million, the yields up by 0.62% YOY but the sales down by 1.56% YOY.

 

Chinese tire industry faces the further aggravated international trade environment. In the end of April 2009, America suddenly put forward special safeguard investigation into Chinese tire consumption. The involved export volumes and amounts respectively accounted for 75% and 88% of the total export volumes and amounts. America is China’s largest target country of the tire exports, accounting for one third of the total export volumes and one fourth of the total export amounts. Once America restrains the total import amounts of tire from China, China’s tire exports will cut down by 6%. What is much worse, if America carries out the special safeguard, the other members of WTO can carry out the special safeguard measure for China’s tire exports without investigation at random.

 

When the yield increases in Chinese tire industry, the continuous decline of the exports and the limited domestic demands, the inventories of the enterprises will rise and further affect the capital flows, leading to the profit decline even losses.

 

Source: China Research and Intelligence

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