Since 2010, the demand for tires in China is still on the rise. Preliminary analysis of the tire industry will continue to maintain modest growth, which may be around 10%. However, as the price of natural rubber has broken through historical highs and the production costs of tire companies have risen sharply, the overall profit of the tire industry in 2010 may have a negative growth, and the market trend will show a high and low trend. Cai Weimin, secretary general of the Rubber Industry Association of China Rubber Industry Association, made the above statement in an interview with reporters.

According to statistics from the Tire Branch, in the first quarter of 2010, the output of 45 member companies’ tires was 70.15 million, an increase of 42% year-on-year; sales revenue was 37.1 billion yuan, an increase of 43% year-on-year. Among them, the output of radial tires was 58.29 million, an increase of 47% year-on-year. In addition, there were 27.59 million tire exports, an increase of 33.4% year-on-year; export delivery value was 10.6 billion yuan, an increase of 47.5%. Among them, 24 million radial tires were exported, an increase of 30.9% year-on-year.

Cai Weimin analyzed that due to the impact of the financial crisis in the same period of 2009, the industry's economic operation was at a historically low level and the comparability was not significant; and according to the first two months of 2010 and the second two months of 2009, the tire production decreased by 11.4%. The value of delivery fell by 15.9%. Only sales revenue increased by 10%. As the tire industry in 2010 is faced with the impact of U.S. tire special protection and other trade protections, there are many uncertainties and it is expected that the market will show highs and lows.

Shen Jinrong, Chairman of Hangzhou Zhongce Rubber Co., Ltd. analyzed that due to the recovery of the world economy in 2010, the tire market was in a state of restocking. “In the process of restocking, it will give the manufacturer a very wrong message. It seems that the market is very good. It also gives the manufacturer a wrong message when destocking. It seems that the market is very bad. 2010 In the first half of the year, two major factors contributed to the relative preference of China's tire market, one was the restocking of the world's tire market, and the second was a good expectation for the Chinese market, especially the recovery of rising prices of production materials, which caused many tire dealers and rubber raw material suppliers. All of them have increased their inventory without impunity, so that the market inventory has far exceeded the level of maintaining normal operations, but the real demand for society in the first half of 2010 is far from meeting the demand felt by manufacturers. Can it become a reality? My personal attitude is cautious, but also depends on the second half of the year."

Shen Jinrong pointed out that the sales of Chinese cars have clearly slowed down in April. In the first four months of 2010, the total inventory of auto companies and circulation was 999,600. Among them, the passenger car inventory is 66.4 million, accounting for nearly 70% of sales in April. This is a signal that the industry must pay attention to.

In addition, Shen Jinrong also reminded companies to pay special attention to the data of tires' finished products inventory. He said that the number of tires finished goods inventory is calculated at cost price. In 2009, the annual sales revenue of member companies was RMB 140.14 billion, but the total value of finished goods inventory at the end of the year reached RMB 10.23 billion, and the average finished product inventory exceeded one month. This proportion is too large. Although stocks in 2009 decreased by 4.1% year-on-year, due to the lower overall costs in 2009, the unit price of finished goods inventories fell by more than 4.1% from 2008, which indicates that the actual quantity of finished goods stocks is increasing. In the first quarter of 2010, the total inventory value of finished tires of member companies was still as high as 10.13 billion yuan, a year-on-year increase of 9.7%, which is worthy of vigilance by the industry.

In addition, as natural rubber prices have exceeded historical heights, Shen Jinrong believes that the negative growth of China's tire industry in 2010 as a whole is a high probability event. "If you sell tires at the current price of raw materials, the Chinese tire industry will suffer a total loss. This is the most prominent and serious problem at present. We can only strive to minimize the level of losses."

It is understood that since 2010, China's tire export situation is relatively good, except for the decline in exports to the United States due to tire special protection cases, other areas have increased. This is because when the foreign tire market is finished destocking and sales return to normal, the merchants have a process of restocking.

China's economic recovery is three quarters faster than the world's. Restocking has already ended in the fourth quarter of 2009, and the restocking of the world market should end in the first half of 2010. Then, the whole big market may end.

Shen Jinrong believes that in 2010, the tire industry's exports will face greater policy variables. If overseas restocking is completed in the first half of 2010, its economic policies will be tightened accordingly. “A little tightening will also affect market expectations. Once the economic stimulus policy withdraws or the withdrawal signal becomes stronger and stronger, it will definitely affect the prices and supply and demand relations of the world's bulk basic raw materials. If prices and supply-demand relations are suppressed, all imports Merchants' enthusiasm for purchases will be affected, which will affect the final market.” In addition, domestic export policies, if the renminbi appreciates, the impact on tire exports is beyond doubt. If the renminbi appreciates by 5 percentage points, statically seeing the industry's export interest rate may become negative. Even if everything stays the same, the market will slow down in the second half of 2010, because foreign restocking is over.

Shen Jinrong also stated that the higher profits of the industry than normal in 2009 are not the norm, and should not inflate the desire for investment. There is a limit to the market demand. Exceeding this limit will lead to excess. He believes that the oversupply will soon appear. Terminal sales in 2010 will no longer be as intense as in 2009.

Cai Weimin pointed out that in the first quarter, the export volume of member companies only accounted for 39% of the output, which was still relatively weak compared with the normal situation in the past. The increase in demand for the domestic tire market was limited, and a large number of new production capacity was released, which may create a situation of oversupply. Therefore, companies should invest rationally and enhance market risk awareness.

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