Even as fast-growing demand from China has been pointed to as a cause of the problem, the China Rubber Industry Association has referred to rising rubber costs as a "grim situation."

The CRIA reports that rubber prices, currently approaching RMB 40,000 per ton, have caused tire production costs to increase by 50% and squeezed profit margins to a record low, with year-on-year profits declining by up to 50% last year.

In light of this industry crisis, seven CRIA members met in Beijing on Jan. 13 to discuss possible countermeasures.

Present at the meeting were Hangzhou Zhongce Rubber, Aeolus Tyre, Double Coin Holdings, Guizhou Tyre, Triangle Group and Shandong Linglong Rubber.

Representatives from the seven tiremakers broached the issue of skyrocketing raw material costs and the need for market intervention, including a reduction in import duties, to control prices. All seven firms stated they would stop tire production for two weeks during China’s New Years holiday, which this year begins on Feb. 3, but that stoppage had been anticipated anyway.

In an oddly unrelated comment, Double Coin general manager Chunchen Yue commented that China’s domestic tiremakers hold a major share of the country’s radial truck tire market and therefore the collapse of any of these companies would be a great loss to the country as a whole. (Tyres & Accessories)