According to related departments, in the second half of 2014, the production and sales volume of the tire industry in China will continue to grow, but the increase will return to single digits. The number of vehicles in China exceeds 100 million. In 2014, China's auto industry maintained a relatively high level of growth, which determined that domestic demand for tires will maintain a certain growth rate in the second half of the year. In the first half of the year, China’s GDP will bottom out by about 7.0%. In the second half of the year, the government will adopt appropriate policies to stimulate economic development. China's initial PMI rose to 50.8 in June, the highest since November last year, and it was the first time this year that it rebounded above the line of rising and falling, indicating that China's manufacturing activity has expanded for the first time in half a year, laying a good foundation for the second half of the year. basis.
In terms of exports, the global automobile recovery, especially in the United States, is now evident. The relevant agencies expect that in 2014, US auto sales will exceed 16 million units, a record high. Moreover, the price performance ratio of China's tire industry is better than most foreign brands, so tire exports continue to improve. Although the U.S. Steel Workers Federation filed a double counter-survey application against Chinese tires in early June, even if the U.S. government approves it, it will take a long time to implement it. And this may also lead suppliers to use this period to hoard our tires and in the short term may stimulate our tire exports to the United States. Therefore, in the aggregate, exports continued to improve in the second half of the year, and deliveries continued to grow at a double-digit rate.
Double drop in prices and profit margins
Since 2014, rubber prices have bottomed out and are now in the bottom region. It is expected that the rise in the second half will be a high probability event, but the rebound rate will not be too great. The declining trend in rubber prices for a long time has seriously dragged down tire prices. Although the price of tires has fallen more than the price drop of rubber, the fall time is not enough. It is expected that the price of tires will continue to be low before the end of the year, with a drop of around 5%. As tire prices continue to fall and rubber prices stabilize or oscillate upwards, the tire industry's profitability will decline and it is expected to fall back to 2% to 3%. Although the sales volume and export volume of tires increased significantly, due to the significant year-on-year decline in the prices, the industry sales revenue and export delivery value are unlikely to increase in the second half of the year. The low price of rubber stimulates tire manufacturers' enthusiasm for production. Manufacturers hold the attitude of rather unwillingness to tread on the air and decide that China's tire inventory will not be low in the second half of the year. Most of the company's inventory will be about one and a half months.
Tire market unpredictable
Since the investment in tires in China has been overheated since last year, tire investment in the second half of the year will be restrained and turning point will appear. First, the decline in the profitability of the tire industry has affected tire companies' investment enthusiasm and financial strength. Second, the heat of tire investment in the past two years has made the structural surplus of tires in China even more pronounced. Now, the tires have a low operating rate, generally below 75%, which will dampen the tire investment enthusiasm. Third, China and some local governments began to control tire investment. Fourth, the U.S.’s double-minded investment is a warning to China’s tires, regardless of whether it is filed or not. Some companies have begun to consider suspending projects or reducing the scale of tire investment. In order to avoid double risks, several tire factories in China, such as Hangzhou Zhongce and Shandong Linglong, will accelerate investment in Southeast Asia and expand overseas production scale.
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