Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

CRI Access Conditions Of China Tire Industry Promote Green Tires Becoming The Development Direction

Research Report: Research Report on China Tire Industry, 2013-2017

CRIREPORT - The access conditions of tire industry are planned to be officially issued in August. With the influence on the stock production capacity and newly-added production capacity, the access conditions will restrain repeated construction with low level and control surplus production capacity of tire industry. More importantly, documents will desalt scale index and put more attention on tire quality and environment protection, so green tires will become the development direction of tire industry in the future.

Access Conditions of Tire Industry will put forward specific requirements on energy consumption, resource consumption, emission, rolling resistance coefficient, etc. MIIT will announce the list of enterprises meeting the requirements and other unlisted enterprises will not be qualified to get the support of policies, credit, etc.

At present, there are 500 tire enterprises in China. If small workshops are counted, the actual number shall far exceed 500. Because different enterprises execute various production standards and the product qualities are uneven, there are cases where "bad money drives out good money". At present, low-end products are dominant in tire market and China tires are labeled with low price and poor quality in international markets, so it is urgent to update and upgrade China tire products.

Although China is the largest tire producer and exporter in the world, its tire products are chronically identified as low-end products in international markets, often suffering trade protection barriers. Moreover, the export prices were also artificially reduced by 20% to 30%, which are even inferior to the brand effects of India, Thailand, etc.

With new materials and designs and little rolling resistance, green tires are mainly radial tires with low oil consumption and little exhaust emission. Green tires will be another landmark technology revolution after bias-ply tires are upgraded to radial tires. Compared with ordinary radial tires, green tires can save 5% to 7% of oil.

At present, green tires sweep around the world. CRI predicts that mandatory grading label bill on green tires will come into effect in China by 2017. Half of tire enterprises will be equipped with green tire production capacity, among which, green tire production capacity shall be more than 50% by 2015. In other words, 25% of the total production capacity will be green tires.

To reduce tire rolling resistance is put in the forefront of all green tire label laws of the EU, the U.S., Japan, Korea, etc. The key technology in reducing tire rolling resistance is to change the regulations of tread rubber. Compared with traditional radial tires, four key raw materials are added, which includes SSBR, rare butadiene rubber, highly dispersed silica white, silane coupling agent.

CRI 's Research Report on China Tire Industry, 2013-2017 show that highly dispersed silica white applied in green tires has huge market potential. CRI predicts that the demands of domestic tires for silica white in 2015 and 2020 are 560,000 tons and 1.65 million tons respectively, among which the demands for highly dispersed silica white are 380,000 tons and 1.42 million tons respectively. In 2012, the demand of domestic tires for silica white was only 180,000 tons, among which, the demand for highly dispersed silica white was less than 40,000 tons.