China Tire Industry Facing Most Serious 0verdraft

From this year, a stream of tire investment boom quickly spread throughout China

, and it comes with tremendous force that is unexpected. According to the incomplete statistics, there are no less than 40 new items in tire industry, all-steel tires less is 600,000 sets and more is tens of millions sets; as for passenger tires, less is 3 million sets and more is 15 million sets, the production capacity has been exceeded the demands severely. Reporters appeal that relevant departments and industries should pay high attention urgently on this phenomenon. Relevant experts also advise tire enterprises to have rational investment in order to reduce risk.

After investigation reporters know that, Shandong Guang Nao Company, known as the nest of tires recently have initiated a tide of constructing all-steel and semi-steel radial projects, and this project has reached more than 10. The scale in building of the radial tire project has reached 50 million sets and it is expected that the production capacity can be formed in the next two years. Shandong Jin Yu Company plans to expand the all-steel tires to 300 million sets per year, and the semi-steel tires to 15 million sets per year; except Guang Nao there are more than 10 radial tire projects in Shandong. In addition, according to the survey of the reporters, now the investment boom of the tire enterprises is spreading in many areas except Shandong Province.

When reporters investigate and cover the reason why so many areas start to have the tire projects, Mr. Chen Jinrong said that, in the beginning of this year the market expected that the world economy would continue to show a recovery trend, so the tire markets are all in the state of replenishing stock. In this process, manufacturers may get a wrong signal that the market prospect is better. Therefore, most manufacturers automatically speed up the production and capacity expansion. The centralized, large-scale, rapid expansion of constructing the tire projects will seriously intensify the fierce competition and disorder in tire industry, now the risk of over-expansion has begun to appear. According to the statistics of China Rubber Industry Association Tire Branch, from January to May of this year, the stocks of China's major 43 tire companies have increased 23% compared with the same period last year, and the phenomenon of tire accumulation around most factories appeared again. In June the decrease of tire price is generally about 15% compared with the peak, many companies cannot help but begin to limit their production.

Mr. Ju Hongzhen, the honorary president of China Industry Association, worried about the current investment boom. He took the engineering giant tire boom in 2008 as an analogy and said that, the engineering tire boom has caused serious surplus on China's engineering giant tire, the day the production line of most engineering giant tires to put into operation is the day to stop production. But this year the tire investment boom has exceeded the boom of engineering tire, which is seriously overdrawing the future of China's tire industry, it is extremely detrimental to the industry development. And he hoped that the tire enterprises could have rational investment and maintain a healthy industry development.

Above provided by SelectChina.com, and find more information on China Auto Parts Manufacturers / China Auto Parts Products.

China Tire Industry Facing Most Serious 0verdraft

By: Deland Selectchina

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