Shandong Province relaxes restrictions on new tyre projects

On 27 June, the province of Shandong, which is an important tyre manufacturing location in China, issued a “Notice on Promoting the Transformation, Upgrading, Adjustment and Optimisation of Project Management in the Tyre Casting Industry.” Tyrepress China noted that the release of this document means that the province has lifted restrictions on new and expanded tyre projects to a certain extent.

In the past few years, Shandong has adopted a capacity replacement strategy to strengthen the supervision of carbon emissions. The newly released document shows that Shandong Province’s tyre projects no longer implement the reduction or equal replacement policies. At the same time, in Shandong, technical transformation projects that do not increase production capacity in the tyre industry (excluding the overall demolition and construction of new production lines, capacity integration, and relocation) no longer require exceptional guidance from government agencies.

The document’s impact is twofold. Each municipal unit can implement flexible policies for the original production capacity according to its conditions. “According to the actual development of the industry,” the municipal government will formulate a work plan for eliminating backward production capacity in a “timely” manner.

However, Shandong Province’s requirements for new production capacity are still strict requiring that authorities “strictly control blind investment and low-level duplicate construction”. Meanwhile, the energy efficiency of new projects must reach a certain level, and the construction area needs to choose “development zones and industrial parks of a certain scale”.

In summary, after the release of the new document, the most significant benefit for local tyre companies (substantial companies that have always wanted to expand production) is that they can quickly increase production capacity. At the same time, this central manufacturing province has moderately relaxed the urgency of eliminating outdated tyre production capacity to a certain extent, allowing some smaller tyre manufacturers to adjust their production capacity planning at their own pace.