China’s Rubber Industry Operates Smoothly and Improves Steadily

By Deng Yali, Chairman of China Rubber Industry Association

In 2014, China’s sales revenue for rubber products reached RMB987 billion. Domestic tire output reached 562 million pieces, up 6.24% year-on-year. Within that, the proportion of radial tires reached 90%, with 511 million radial tires produced, a year-on-year growth of 7.35%. The output of all-steel tires was 112 million pieces, up 4.67% year-on-year. In 2014, China consumed 8 800 kt of raw rubber, a year-on-year growth of 6.02%, 4 800 kt of which was natural rubber, up 14.29% year-on-year, and the consumption of synthetic rubber was down 2.44%. China’s output of major rubber products during 2012-2014 is listed in table 1.

1. Profit growth declined

In 2014, according to statistics of China Rubber Industry Association, profits of rubber enterprises (excluding makers of additives and skeleton materials) grew 7.72% in the first half and 0.09% in the whole year. The sales profit rate fell slightly, by 0.08 percentage points. The profits of three sectors declined – truck/auto tires, cycle tires and the comprehensive utilization of waste rubbers. In particular, the profit of tire sector grew 5.27% in the first half but shrank 4.41% in the whole year, while the year’s profit of the cycle tire sector was down significantly, by 15.5%.

Table 1    China’s output of major rubber products, 2012-2014

Rubber products    2012     2013     2014
    Output     Growth/%    Output    Growth/%    Output    Growth/%
Tire/million pieces    447    3.07    529    12.55    562    6.24
Radial tire/million pieces    414    4.02    476    14.98    511    7.35
Semi-steel tires/ million pieces    319    3.60    369    15.70    399    8.10
All-steel tires/ million pieces    95    4.50    107    12.60    112    4.70
Motorcycle tires/ million pieces    170    6.25    185    8.82    170    -8.11
Bicycle tires/ million pieces    350    -7.90    300    -14.30    350    16.70
Conveyer belts /million square meters    480    14.30    520    8.30    530    1.90
O-shaped?sealing rings/million    4 500    15.60    4 690    4.20    4 432    -5.50
Automotive shock absorption products /million    14 300    -16.90    14 994    4.90    15 760    5.10
Rubber parts for exported automobiles/million    25 900    -15.60    28 891    11.50    31 779    10.00
Rubber shoes/million pairs    4 500    15.60    4 690    4.20    4 432    -5.50
Comprehensive utilization of waste rubbers/kt    3 900    16.07    4 300    10.26    4 650    8.14
Reclaimed rubber/kt    3 500    16.67    3 800    8.57    4 100    7.89
Rubber powder /kt    400    11.11    500    25.00    550    10.00
Carbon black /kt    4 320    12.12    4 700    8.85    5 100    8.46
Carbon black using wet process/kt    4 150    11.26    4 580    10.36    4 970    8.52
Rubber auxiliaries /kt    890    8.54    1 000    12.36    1 130    13.00
Accelerators /kt    322    9.15    360    11.80    395    9.72
Antioxidant /kt    320    0.31    330    3.13    385    16.67
Polyamide fiber cord fabrics/kt    289    -9.10    305    5.50    321    5.20
Polyester fiber cord fabrics/kt    156    -4.30    186    19.20    227    22.00


Table 2    China’s tires export, 2012-2014

    Item    Tire    Car tire    Truck and bus tire
2012    Export volume (million pieces)    4.41    1.51    2.33
    Growth (%)    9.6    6.1    13.1
    Export value (US$ billion)    15.9    5.9    8.1
    Growth (%)    7.6    5.7    8.9
2013    Export volume (million pieces)    4.99    1.76    2.67
    Growth (%)    13.3    16.5    14.4
    Export value (US$ billion)    16.2    6.2    8.1
    Growth (%)    1.7    5.2    0.9
2014    Export volume (million pieces)    5.65    1.88    3.15
    Growth (%)    13.2    6.8    17.9
    Export value (US$ billion)    16.5    6.1    8.5
    Growth (%)    1.9    -1.6    4.9


2. Prices of both raw materials and rubber products decreased

In 2014, the prices of rubber raw materials were slack, with some fluctuation, the prices of products slid constantly, and the profits of enterprises also slid. The price index of heavy-duty tires decreased from 91 in early 2014 to 85 in December 2014, a drop of 6.9 base points, and the price index of truck/auto tires reduced from 90 in early 2014 to 84 in December 2014, a decrease of 7.4 base points. The profit margin of enterprises narrowed drastically.
In 2014, China imported 2 610 kt of natural rubber, up 5.6% year-on-year; the import value was US$4.95 billion, down 22.5% year-on-year. China’s import volume of compound rubber reached 1 600 kt, a year-on-year growth of 4.0%; the import value was US$3.258 billion, down 24.0% year-on-year.

3. Growth of export volume

In 2014, the delivery value of China’s rubber exports rose 7.4%, a year-on-year growth of 6.6 percentage points, and the export ratio was 29.1%, up 1.3 percentage points. Of which, the export volume of tires increased but their export price decreased. The export volume and export value of 46 key tire enterprises rose, on average, by 22.6% and 3.5%, respectively. China’s tire export data during 2012-2014 are shown in table 2.

Future development

By 2015, the operation of China’s rubber industry is expected to stabilize, and the main economic indicators will remain low. Output of major products will increase but will grow more slowly than in 2014. The export volume of major products will keep growing, but growth of both volume and overall value will slow down. The consumption of rubber will generally be stable, and the volumes of natural rubber and synthetic rubber will be close.
This year, market forces are resisting the growth of output for major rubber products. New products with high added value and potentially strong demand will prosper, and market competition will grow fiercer.
The domestic rubber industry depends heavily upon foreign trade, the imports contribute more than 80% of the natural rubber it uses and tire exports account for over 40% of the output of rubber goods. Influenced by the global economic slowdown and slack domestic demand, the growth of both imports and exports slowed in 2014.
Since China adjusted the standard for compound rubber and the tariff on natural rubber, the demand for rubber products has become more uncertain. By 2015, China’s consumption of raw rubbers is expected to exceed 9 100 kt, up around 4%, and the consumption of natural rubber will be close to that of synthetic rubber.