In 2022, China’s tire manufacturing costs are mainly composed of raw material costs, labor costs, depreciation costs, energy costs and freight costs, of which nearly 80% come from raw material costs.
The main raw materials for rubber tires are rubber, steel, carbon black, etc. Rubber tires can be divided into tube-type tires and tubeless tires, which can be used in cars, trucks, vans, new energy vehicles, aircraft and other vehicles or machinery.
From 2016 to 2021, the annual output of natural rubber and synthetic rubber in China is on the rise. Affected by the expansion of demand in China’s downstream market, the output of China’s rubber industry has increased. In 2021, China’s synthetic rubber output will be 8.117 million tons, and natural rubber output will be about 850,000 tons.
The import and export trade of China’s rubber industry has always been in a state of trade deficit, and the import volume is much higher than the export volume. The demand for rubber in the Chinese market is not low and is increasing year by year, but the output value of the Chinese rubber industry is not high and cannot meet the market demand. Therefore, the Chinese rubber market relies on the supply of imported rubber. In 2021, China’s natural rubber national output is still insufficient, and a large amount of it comes from imported natural rubber. The import volume is 2.19 million tons; due to the improvement of China’s synthetic rubber process, China’s synthetic rubber output has increased year by year in recent years, and its supply capacity to the domestic market has improved. The degree of rubber dependence has decreased. In 2021, China’s synthetic rubber imports will be 4.385 million tons, a year-on-year decrease of 38.36%.
The main raw materials for tire manufacturing are carbon black and steel. In 2021, the price of coal tar, the main raw material of carbon black, and the purchase price of energy will rise sharply year-on-year, resulting in major changes in the market price of carbon black, and the purchase price of tire manufacturing enterprises will rise accordingly.
Tire Manufacturing Analysis
In 2018, the output of rubber tire casings in China decreased by 1 billion year-on-year, and it increased in 2019. However, due to the impact of the epidemic in 2020, the output of tire casings in China decreased year-on-year. In 2021, the epidemic situation in China will ease, the society will resume work and production, and the demand for rubber tires in downstream industries will increase as a whole.
China is a big consumer of rubber tires, but China is also a big producer of rubber tires. The export value of China’s rubber tires is much higher than the import value. In 2021, the import value of China’s new pneumatic rubber tires will only be 1 billion US dollars, but the export value will reach 16.7 billion US dollars, the import value will increase by 16.28% year-on-year, and the export value will increase by 25.66% year-on-year.
In 2021, various costs of China’s tire manufacturing industry will increase year-on-year. Among them, the industry freight cost increased the most year-on-year, with a year-on-year change of 25.28%; followed by the raw material cost, which increased by 15.01% year-on-year. The increase in various costs puts pressure on the manufacturing of enterprises.
The first-tier listed companies in China’s tire manufacturing industry include Linglong Tire and Qingdao Double Star. Represented by Linglong Tire and Qingdao Shuangxing, in 2021, the gross profit margin of major Chinese companies in the tire industry will vary year-on-year according to the situation of each company. In 2021, the tire export sales of Chinese enterprises will increase year-on-year. However, due to the increase in manufacturing costs and the surge in export shipping costs, the export sales costs of various enterprises will increase linearly. Although the export revenue of the tire industry of various enterprises has increased year-on-year, the export revenue of enterprises Gross profit margin declined year-on-year.
In 2021, the overall profitability of China’s tire industry is not optimistic, the entire industry is in a downward state, and new industry changes are needed to stimulate industry growth.
Downstream Industry Situation
For a long time, the automotive industry is the largest industry in which the rubber tire industry is applied. In 2019, affected by various factors, China’s automobile production and sales dropped sharply. In 2020, affected by the epidemic situation, China’s automobile production and sales fell again, which caused the market to reduce the demand for rubber tires again and again. In 2021, the situation of China’s auto industry will pick up slightly. The production of automobiles will reach 26.082 million and the sales will reach 26.275 million. As a result, the market demand for rubber tires will rebound.
In 2021, many unfavorable factors such as the epidemic, rising raw material prices, transportation obstruction, “double-reverse” in Southeast Asia, and declining production and sales in the downstream automobile market will ferment. China’s tire industry will usher in a dark moment. However, judging from the data changes of new energy vehicles in recent years, China’s rubber tire industry may usher in a turnaround.