Tire company's profitability in 2011 is not optimistic

According to statistics released by the General Administration of Customs, China imported 1.68 million tons of natural rubber (including latex) from January to December 2010, an increase of 8.8% over the same period of 2009; imports of synthetic rubber (including latex) were 1,655,400 tons, compared with 2009. Year-on-year growth of 6.3%. Among them, natural rubber imports in December amounted to 180,000 tons, and 151,100 tons of imported synthetic rubber.

Chang Yingzhi, a researcher in the chemical industry of China Investment Advisors, believes that due to the booming domestic auto market in recent years, the production and sales volume of autos has increased significantly. Tire companies are optimistic about the future development prospects, and have expanded their tire production capacity, resulting in the import of rubber in China in 2010. In the case of high rubber prices in the year, there was still an increase compared to 2009.

According to the data released by the China Association of Automobile Manufacturers, in 2010, China's auto production and sales volume have all exceeded 18 million, reaching 18,264,700 and 18,806,900 respectively, an increase of 32.44% and 32.37% respectively. Among them, the production and sales of automobiles in December were 1.864 million and 1.666 million, respectively, an increase of 6.27% and a decrease of 1.79% respectively from the previous quarter, and an increase of 22.30% and 17.90% year-on-year respectively.

The price of rubber rose sharply in 2010. According to the "2010-2015 China Rubber Industry Investment Analysis and Forecast Report" issued by China Investment Advisors, the highest price of natural rubber is around 28,000 yuan/ton before the financial crisis. In 2010, the price of natural rubber rose sharply. Especially in the second half of the year, rubber prices rose almost in a straight line. By November, domestic rubber futures prices were once as high as 39,000 yuan/ton.

Chang Yuzhi believes that although the production and sales volume of China's autos have increased year-on-year in 2010, the growth rate has slowed down in terms of monthly sales. In addition, recently, cities with large spending power have begun to introduce measures to stop blocking and the state's measures to encourage auto consumption will also be withdrawn. This will, to a certain extent, curb sales of automobiles. It is expected that the production and sales of automobiles in 2011 will not have a hot market in 2010. In recent years, the production capacity of automakers has expanded rapidly. At that time, there will be excess capacity in the auto industry, which will affect the demand for tires.

Moreover, due to the high rubber prices in 2010 and the pattern of easy rise and fall, the price of natural rubber is still at a high level, and the production cost of tire companies has increased significantly, which has caused some domestic tire companies to have suffered losses. Therefore, under the expectations of high raw material prices and limited demand, it is expected that the profitability of tire companies in 2011 will be less optimistic. According to relevant data, from January to November 2010, the profit of the tire industry fell by 22% year-on-year, and the loss reached 26%.