Chinese rubber demand steady in shift from truck to car tires

ERJ staff report (BC)

New York – Rubber demand in China may be unchanged in 2013 as consumption by the heavy truck sector slows amid higher tire output for passenger vehicles, according to Hangzhou Zhongce Rubber Co. as reported by Bloomberg News.

Zhongce Chairman Shen Jinrong is quoted as saying that the Chinese tire industry will endure thin profit margins. "We need to further upgrade and continue to focus on the passenger-car tire market," he added.

China’s tire industry will use 3.25m tonnes of natural rubber this year, according to the China Rubber Industry Association (CRIA). NR prices have dropped 14 percent this year in Shanghai and 6.6 percent in Tokyo amid fiscal turmoil in Europe, stockpiles at their highest in three years and slower economic growth in China.

About 70 percent of China’s NR use is in tire making, of which 70 percent is in heavy-truck tires, said Tong Jingjing, an analyst at Sri Trang in Shanghai, a unit of Thailand’s biggest rubber exporter. Overall, China’s tire output may rise by 4 percent this year, according to Deng Yali, CRIA chairman.

But a 4 percent increase in tire output doesn’t translate into a 4 percent increase in NR, Shen cautioned. "Most of the growth is in passenger car tires, which use less natural rubber, and tire makers are opting to use more synthetic rubber," he said. CRIA has projected a nearly 8 percent increase in Chinese synthetic rubber consumption in 2013.