Chinese tyre makers lost share value in 2011
With China accounting for about 34 per cent of global rubber demand in 2011 and with demand for cars slowing last year in the People’ Republic, the varied economic climate is proving to be a challenging environment for the countries fast growing domestic tyre manufacturers.
According to China Daily and Bloomberg reports, China's economy is forecast to grow 8.5 per cent next year, the least in 11 years, according to the Organization for Economic Cooperation and Development (OECD). Vehicle sales may rise by the least in 13 years in 2011, plunging from last year's record 32 per cent, the China Association of Automobile Manufacturers reported.
Giti Tire Corp, the largest tyre maker based in China, for example dropped 30 per cent in Shanghai last year and those of Double Coin Holdings plunged 42 per cent apparently reflecting slowing vehicle sales. “Next year it’s likely that supply will outstrip demand because of a slowdown in the global economy and the subsequent weak demand from the auto and tire sectors,” He Yihua, a trading manager at Okachi told China daily.
The increasing use of substitute synthetic rubber will also lead to reduced use of the natural product, said He. Synthetic rubber may have reduced natural rubber consumption by about 545,000 tons in 2011, he said.
Inventories at bonded areas in Qingdao, the country’s biggest spot-rubber trading hub, climbed to between 270,000 tons and 280,000 tons last month, signalling sluggish demand and causing large tyremakers to query whether or not they should be hedging at the lower prices.