New Material Intelligence NMT | The tire industry has become more and more popular with the sound of “rising”!

Since this year, tire prices have fluctuated frequently and have risen many times. According to incomplete statistics by a reporter from Securities Daily, since December 2022, more than 30 tire companies have issued price increase letters. With the sound of the “rise” of tire companies, will the industry become more involved?
Rising costs make price increases imperative
Industry insiders say the main reason for the multiple tire price increases is the significant increase in production costs of tire companies. The main raw materials for tire production include rubber, carbon black, steel cord, and various rubber additives. In recent years, the prices of these materials have increased to varying degrees. At the same time, factors such as rising coal prices and power restrictions also make production costs higher for enterprises. According to data from Business Daily, the price of carbon black in 2022 reached a new high in nearly a decade. The price of carbon black rose from 9175 yuan/ton at the beginning of last year to 12050 yuan/ton on December 31, an increase of 31.34%. It is understood that the overall profit of the tire industry decreased by more than 30% year-on-year in November. In other words, although tire companies have conducted multiple rounds of price increases, the range of product price increases is still difficult to offset the pressure of rising costs. https://www.slw-ele.com/
New Material Intelligent NMT | The tire industry is becoming more and more popular amid the “boom” sound!
In addition, due to the impact of the epidemic, the operating rate of the tire industry is insufficient, and the supply side further shrinks. According to data from Baichuan Information, the recent all-steel tire operating rate was 47.4%, down 7.9 percentage points month on month and 14.6 percentage points year on year; The operating rate of semi steel tire was 52.5%, down 6.2 percentage points month on month and 11.5 percentage points year on year. In this situation, once demand picks up, it is imperative for tire prices to rise.
The market is expected to recover under the policy due to the decline in sales volume caused by price rise
It is reported that tyres are generally divided into all-steel tyres for passenger and freight cars and semi-steel tyres for cars. With the continuous notice of price increase, end users are discouraged. Last year, the downstream demand was relatively weak, the market sales had declined for seven consecutive months, and the tire sales had decreased significantly. Because the dealers’ stock in the first half of the year has not been fully digested, and the market inventory is at a high level, even many tire stores have to tear down the price to promote at a loss. The tire dealers can’t afford to play and dare not stock easily. In terms of export, although many enterprises have increased their orders, the completion rate of export orders is not high due to multiple factors such as shipping price and transportation capacity tension, which is also the difficulty and pressure faced by many domestic tire enterprises.
However, after the optimization of epidemic prevention and control measures, logistics transportation and residents’ travel demand have significantly recovered, and the domestic tire market will achieve further development. In the overseas market, since the third quarter of last year, the price of sea transportation has decreased significantly, greatly reducing the export cost. Even with collective price increases, the cost performance of domestic tire products is better than that of foreign products, and the profits of tire companies are expected to be further repaired.
The market reshuffles and the tire industry ushers in a new pattern
The Chinese tire market is relatively concentrated, with a large number of tire manufacturers and fierce market competition. Some small and medium-sized enterprises have excess capacity, and the supply of low-end products exceeds demand. In order to quickly seize the market, there are many ways to reduce prices, which to some extent has brought adverse effects to the industry. After this price increase and strict requirements of environmental policies such as “dual carbon”, the concentration of the tire industry will further increase, and some small enterprises will be eliminated. Overseas markets, high-end markets, and new energy vehicle tires may become breakthroughs in the tire industry.
In recent years, due to the global epidemic, the production of tire factories in Europe and the United States has been affected. Under the epidemic environment, consumers also prefer to choose products with high cost performance, which is conducive to the acceleration of overseas market expansion of China’s tire head enterprises. In terms of new energy vehicles, China’s new energy vehicle market is in a period of rapid development, and the market demand continues to be strong. According to the statistics of the China Association of Automobile Industry, in November 2022, new energy vehicles continued to maintain rapid growth, and the monthly production and sales reached a new high. Its new categories of tires, such as auto tires, became a new outlet for the tire industry. For many enterprises, continued to increase investment in research and development, and continued to develop differentiated new energy vehicle supporting products, may be able to rapidly carry out enterprise innovation, achieve corner overtaking in the tire industry, and win market opportunities.
Survival of the fittest has always been the basic principle of market competition. The collective price increase of tire enterprises is just a small storm facing the industry. In order to achieve long-term development, tire companies can only go further by continuously increasing research and development investment, continuously advancing at the product level, entering the high-end market, and forming competitive differentiation. After the price increase, the tire industry will undergo a new reshuffle, becoming larger and larger, presenting a new pattern in the industry.