Shengda comments on China's tyre policiy

ERJ staff report (DS)

Shanghai, China -- ShengdaTech, Inc., which makes calcium carbonate ("NPCC") in China, has commented on the Tire Industry Policy (the "Policy") issued by the Ministry of Industry and Information Technology of the People's Republic of China ("MIIT") on September 15, 2010.

According to Mr. Xiangzhi Chen, Chairman and Chief Executive Officer of ShengdaTech, "Because the tyre industry is a key NPCC application area for the Company, we thought it important to respond to the new policy so that our shareholders would understand our very positive position on this matter."

The Chinese government has been advocating the transition of production from cross-ply tyres to radial tyres since 1996. At the end of 2008, radial tyres accounted for 70 percent of total tyre output. The Policy aims to further improve China's tyre industry by promoting technological improvements and structural upgrades.

"China's cross-ply tyre market was one of our earliest NPCC application end markets; however, we realised many years ago that the transition to radial tyres was inevitable. Consequently, we have successfully planned and implemented accordingly to move effectively with the product-mix changes in the market, both in demand, and, in this case, government policy. Over the past two years, we have gainfully penetrated the radial tyre market, and we currently supply NPCC products to four product categories: steel radial tyres, off-the-road tyres, cross-ply tyres and powered-vehicle tyres including tyres for motorcycles, bicycles and handcarts. For the three months ended September 30, 2010, sales from the cross-ply tyres application only accounted for 20 percent of our total sales to the tyre industry. The sales from steel radial tyres, off-the-road tyres and powered-vehicle tyres contributed 45 percent, 20 percent and 15 percent, respectively, to our total sales from tyre industry applications," commented Mr. Chen.

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Press release from Shengda