China to slow drastically investments in new tyre factories

ERJ staff report (DS)

Beijing, China -- On 11 October this year China published a new industrial plan for the tyre industry under the name, The Tire Industry Policy. The policy says no tyre plants may be built in 2009 - 2011, and introduces other methods to severely restrict the over-capacity situation in China and to modernise the industry.

The plan sets a minimum size of 1.2 million units per year for new truck tyre projects and a minimum size of 6 million units/year for car tyre projects. If a proposed tyre factory aims to make both car and truck tyres, then the plant must meet the minum requirement in every relevant category. In the case of large off-road tyres, the minimum capacity should be 30 000 units/year.

The plan says capacity for all-steel truck radials was 75 million in 2008, 80 million in 2009 and over 90 million in 2010. This is double the number envisaged in the previous five-year plan, and double the real domestic demand. Even if 30 percent of total output is exported, the capacity available far exceeds domestic demand. This has led to a limit on output at some factories.

CRIA reports that over 40 new or expanded tyre factories opened in the first half of 2010. Some of these were set up as pure speculation by companies who had no previous experience of the tyre industry and represent low-technological level.

The new policy also favours radial tyres over cross-ply, and seeks to encourage tubeless tyres. The government intends to cease production of cross-ply tyres for passenger cars by 2015 and to reduce to 10 percent the cross-ply figure for heavy trucks and 15 percent for light trucks. ALl future expansionprojects for cross-ply tyres will be blocked, with the sole exception of aircraft tyres.

The new policy recommends that tyre makers work more closely with vehicle makers to develop tyres suited to the end user markets.

The policy includes a clause to move from high energy consumption to low energy consumption and greater efficiency.

Further clauses sek to encourage the use of bar codes in factories and the use of RFID systems in tyres

In addition, the policy seeks to encourage the use of recycled rubber in tyres and to develop a used tyre recycling industry

The document requests tyre makers to participate in the natural rubber industry, from plantations to rubber processing factories. Furtermore, the Chinese government wants to encourage the development of synthetic rubber for the tyre industry, including butyl rubber, isoprene rubber and to increase the proportion of SR used in comparison with NR

The government has also insisted that existing plants meet new environmental restrictions by the year 2012

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Press report from CE.cn

Official announcement

from MIIT (Chinese language)

Official announcement

auto-translated into English (from Chinese)

Official documents

from MIIT (Chinese language)