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

Since this year, the tire price has fluctuated frequently, and the price has risen many times. According to incomplete statistics by the reporter of Securities Daily, since December 2022, more than 30 tire companies have issued price increase letters. With the sound of “rising” of tire enterprises, has the industry become more involved?
The cost keeps rising, and the price increase is imperative
According to industry insiders, the main reason for the multiple rounds of tire price increases is the sharp rise in production costs of tire enterprises. 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 risen to varying degrees. At the same time, factors such as rising coal prices and power rationing have also made the production costs of enterprises higher. According to the data of the Business News Agency, the price of carbon black in 2022 has reached a new high in nearly a decade. The price of carbon black has risen from 9175 yuan/ton at the beginning of last year to 12050 yuan/ton on December 31, with an increase of 31.34%. It is understood that the overall profit of the tire industry in November fell by more than 30% year on year. That is to say, even though the tire enterprises have carried out several rounds of price increases, the range of product price increases is still difficult to offset the pressure of cost increases.
New Material Intelligence NMT | The tire industry has become more and more popular with the sound of “rising”!
In addition, affected by the epidemic, the operating rate of the tire industry is insufficient, and the supply side is further contracted. According to the data of Baichuan Information, the operating rate of all steel tires in the near future is 47.4%, down 7.9% month-on-month and 14.6% year-on-year; The operating rate of semi-steel tire was 52.5%, down 6.2% month-on-month and 11.5% year-on-year. Under such circumstances, once the demand recovers, it is imperative to increase the price of tyres.
The market is expected to recover under the policy due to the decline of 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, the demand for logistics transportation and residents’ travel has recovered significantly, and the domestic tire market will achieve further development. For overseas markets, since the third quarter of last year, the shipping price has dropped significantly, which has greatly reduced the export cost. Even if the collective price rises, the cost performance of domestic tire products is also better than that of foreign products, and the profits of tire enterprises are expected to be further repaired.
The market reshuffled and the tire industry ushered in a new pattern
China’s tire market industry is relatively concentrated, with a large number of tire manufacturers, and fierce market competition. Some small and medium-sized enterprises have overcapacity and oversupply of low-end products. In order to quickly seize the market, there are many ways to reduce prices, which has brought adverse effects to the industry to a certain extent. After this price rise and the strict requirements of “double carbon” and other environmental protection policies, the concentration of the tire industry will further increase, and some small enterprises will be eliminated, while overseas markets, high-end markets and new energy automobile tires and other fields 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.
The 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. If tire enterprises want to develop in the long term, they can only go further if they continue to increase investment in research and development, continue to advance at the product level, enter the high-end market, and form competitive differentiation. After the price rise, the tire industry will undergo a new reshuffle, becoming more and more voluminous, presenting a new pattern of the industry.