Profit of the domestic tire industry fell 6.61% YoY in the first half of 2022, the industry’s hardest period in recent three years, according to the China Rubber Industry Association. Further, tire output and operating revenue both decreased, with production of all-steel radial tire falling nearly 20% YoY.

Domestic tire firms are mainly troubled by five problems. First, the nation’s carbon peaking and carbon neutrality goals curbed development of energy-intensive industries like steel and heavy chemicals, and further decreased domestic freight volume. In the first half of 2022, the nation’s highway freight volume was down 4.6% YoY to 17.7 billion tons, and sales volume of trucks dropped 42.2% YoY.

Second, rail and water freight volume rose 20% and 15%, respectively, during H1 2019-H1 2022, while highway freight volume fell 7%. Hence negative impacts on demand for tires. Third, tariffs on imported natural gas remained high, forcing domestic tires firms to utilize low-quality but expensive compounded rubber and synthetic rubber. The other two problems mainly involve higher costs (e.g. labor and raw material costs), and decreasing consumption demand in China. To contend with difficulties, tire firms should actively take measures like adopting advanced technologies, cultivating talents, focusing on green development, etc.