In the first quarter of 2006, China’s rubber industry kept a rapid growth, according to the statistics collected by the China Rubber Industry Association (CRIA) from 242 members. The tyre output grew by 17.17%, the rubber shoes output by 9.65%, conveyor belt output by 19.62% and carbon black output by 13.23%.

The total net sales value was 24.2 billion yuan; the year-to-date percentage change through the first quarter being a growth of 26.43%. The year-to-date change for rubber consumption through the first quarter was an increase of 16.98%.

Tyre Production, Exports Up
According to statistics collected from 45 members of the Tyre Branch of the CRIA, the tyre production grew sharply in the first quarter of 2006, and the economic index showed an upward trend. The tyre output was 41.79 million units, of which the radial segment accounted for 29.3 million units, or 70% of the total tyre output.

Tyre export continued to grow – worth 6.8 billion yuan – up by 44.13%. The exports of radial tyres grew by 45.9 %. The tyre exports volume reached 18.47 million units, of which radials accounted for 10.64 million units, that is, up by 21.63%. And, the tyre sales were worth 18.36 billion yuan, up by 26.98%. Tyre business was adversely affected by the high cost of raw materials. The tyre industry’s profits dipped by 23.76%.

Meanwhile, data gathered from 21 members of the CRIA shows that the sales of cycle casing tyre was worth 1.19 billion yuan in the first quarter of 2006, up by 6.4%. The production of motorcycle tyres was 17.34 million units (the year-to-date percentage change through the first quarter showing and increase of 49.6%), the trolley tyre output stood at 3.86 million units (the year-to-date percentage change through the first quarter showing a 67.3% increase).

As for bicycle tyres, 45.66 million units made for a 16.7% increase in the year-to-date percentage change through the first quarter. And, the year-to-date percentage change through the first quarter for the profit of cycle casing tyre registered a 33.9% increase.
    
Rubber Hose, Belt Do Well
Rubber hose and belt worth 870 million yuan were sold, which meant a 27.1% increase year-to-date percentage change through the first quarter. The output of conveyor belt was 20.68 million square metres and that of rubber hose, 10.14 million metres. The production of v-belt was 27.2 million metres, the year-to-date percentage change through the first quarter being an increase of 119.96 %. The year-to-date percentage changes for special hose and special v-belt of automobile through the first quarter were 31.66% increase and 29.5% increase, respectively.

Rubber Goods Sales Good
As for rubber goods, the sales reached 820 million yuan in the first quarter of 2006, with an increase of year-to-date percentage change through the first quarter at 27.52%. The exports were worth 140 million yuan – the year-to-date percentage change through the first quarter was a 33.61% increase. And, the year-to-date percentage change through the first quarter was a 101.8% increase for the gross profit.

A study of 17 CRIA members showed that the sales of latex goods were to the tune of 340 million yuan in the first quarter of 2006, the year-to-date percentage change through the first quarter being an increase of 13.17%.

Challenges before Chinese Tyre Industry
The Tyre Branch of the China Rubber Industry Association (CRIA) held its third session of the sixth council and the 2006 General Assembly in Guilin on 16 May 2006. At the meeting, the representatives pointed that China’s tyre industry should change the mode of growth and overcome current five issues during the 11th Five-Year Plan period.

According to the report presented by Mr. Fan Xian, Chairman of the Tyre Branch, China’s tyre industry faces five main hurdles during the 11th Plan. First, at present, the growth in output of China’s tyre industry mainly depends on the large consumption of resources, labour and capital investment. It has not got rid of the old economic growth mode.

Second, the boost in investment in the tyre industry led to a sharp increase in tyre production in the previous years. Now, the production capacity of China’s tyre industry is surplus.

Third, China’s tyre exports are facing more and more barriers globally. As China’s rubber industry is growing up, reliance on tyre exports is also growing. If the tyre export is disturbed, the domestic tyre market will face bigger pressure.

Fourth, since China’s NR resource is little, high prices of raw materials have hit the tyre-makers hard. Fifth, the country’s tyre industry has technical constraints, as it upgrades itself from the present resource consumption-based mode to the technology-driven mode, and from imported technology to innovation.

To solve the current problems of the tyre industry, the mode of economic growth must be changed during the 11th Plan period. First, a scientific development concept should guide the tyre industry’s development.  Second, the tyre sector must focus on investment in technology and innovation. Third, tyre market rules needs to be standardised by the government to allow unified tax system for domestic as well as foreign investors. Fourth, recycling and retreading should be given importance.

At the meeting, the Shanghai Tire & Rubber (Group) Company Ltd. and 16 other major tyres-makers proposed to cancel tyre overpack, which increases the costs for consumers and tyre-makers and also pollutes the environment.

The representatives approved the proposal. To begin with, the overpack for export tyre will be cancelled, and then gradually, the overpack for maintenance tyres in the domestic market will be got rid of.

OTR Tyre Boom to Stay
The Chinese off-the-road (OTR) tyre industry is booming and is emerging as a money-spinner. The industry, which began its quantum jump in 2001, has been keeping the pace ever since, with both the small and big players scaling up their production in this bourgeoning sector. By the end of 2006, the radial off-the-road tyre capacity of Shanghai Tire & Rubber Corp. alone is expected to touch 120,000 units.

The background of this bourgeoning scenario is the boom in demand for coal, iron and copper and other vital metals in countries like China, Russia, Indonesia and North America. Because of this, there is a serious shortage of giant OTR tyres across the globe despite the fact that Michelin, Bridgestone, Goodyear and other international tyre companies have done their best to hike the production of these tyres. OTR tyre projects have already become a new worldwide growth area of the tyre industry.