Guangzhou, China – China’s rubber sector, as represented by China Rubber Industry Association members, saw a 4.4% increase in sales in 2016, compared with a 11.3% decrease in 2015, according to information released at the 2017 China Rubber Conference held in Guangzhou last week.
While two-wheeler tires, belt & hose, carbon black and scrap rubber reported a fall in sales growth rate, the rest posted better year-on-year results: the sector’s overall profit jumped 11.6%, compared with a 17% fall in 2015.
The rebound is mainly supported by tire and automotive components, according to CRIA. The non-tire products showed across-the-board rise from investment to ongoing and operating projects, while the tire segment’s growth is mostly in production volume.
Last year, China’s tire production volume increased by 8% to 610 million, including 444 million passenger car tires, 121 million truck and bus tires and 45 million bias tires.
“About 70% of China’s natural rubber consumption goes to tire,” said tire maker Zhongce Rubber’s chairman Shen Jinrong at the event. “There were tremendous, unexpected changes in China’s tire market over the past six months that led to a sharp increase in rubber consumption.”
China tightened regulation on heavy weight vehicle overloading last September, Shen explained, leading to a 30% rise in heavy weight truck sales in 2016 – mostly in the fourth quarter – and over 100% surge in January and February. The OE tire market also saw its growth doubled.
The rising commodity price encouraged tire purchase by distributors, retailers and end users, added Shen. Replacement tire sales volume during this period showed at least 20% monthly growth.
Moreover, the US anti-dumping investigation on truck and bus tire from China drove up its export volume, although at a lower price, before the final determination was issued.
Two other factors, synthetic rubber’s price hike due to butadiene shortage and the bicycle sector’s recovery thanks to the bike sharing business’ “miraculous expansion,” also contributed to the rubber consumption increase. Shen pegged the total increment during the period at 600,000 tonnes natural rubber.
Shen warns such growth might be “just a phase,” but evidence shows it is prolonged by China’s economic recovery and structural reforms.