According to statistics from relevant state agencies, more than 70% of China’s cargo transportation and over 90% of passenger transportation are completed by road. This shows that China's major transportation vehicles are trucks and passenger cars, so the demand for all-steel radial tires in the transportation industry will be long-lasting and stable. If the goal of a meridianization rate of nearly 100% in developed countries is to be targeted, the mid-temporalization rate of China's all steel tires is still less than 60%, and there is still room for development. However, the radialization rate is not the only indicator to measure the development of the tire industry. The development of all-steel tires cannot be blindly repeated construction at a low level. Only by improving technology, quality and brand, can the meridianization rate have true gold content.
Rapid increase in the rate of radialization is the basis for improvement
China's total output of steel tires has grown from less than 7 million in 2002 to 51 million in 2008, with an annual growth rate of 27%, making it the world's largest producer of all-steel tires. In 2008, the output of all-steel tires accounted for more than 40% of global production.
The world’s largest steel cord manufacturer, Bekaert, Belgium, has conducted six on-the-spot surveys of China’s truck radial tire usage rate since 2004, which shows that the Chinese midday rate for carrying truck tires has grown rapidly from less than 30% in 2004. Nearly 60% in 2008, nearly doubled in four years, and completed the course of more than 10 years after the European and American developed countries finished their journey in 4 years, becoming China's tire mainstream products. Bekaert's sample survey of the midday rate of load-carrying tyres was mainly concentrated on highways and some national highways in some of China's capital cities and coastal areas. These cities are relatively economically developed and road conditions are also more conducive to the use of radial tires, so the radialization rate is also much higher than in other parts of China. According to a recent survey, the meridianization rate in the above areas reached 92%, indicating that the development of China's all-steel tires is more dependent on the improvement of road conditions, especially the rapid development of expressways and the growth of cargo traffic.
According to the report of the National Bureau of Statistics, by the end of 2008, the mileage of China’s highways had exceeded 60,346 kilometers. The state plans to increase the national highway network to 85,000 kilometers in the next 15 to 20 years, indicating that the application of all-steel tires will still have great potential for development.
Eastern Market Saturates Midwest with Potential
The development of the tire industry is closely related to economic development. In the economically developed areas of eastern China, the roads are in excellent condition and are very suitable for the use of radial tires. The rate of midday load for high-grade highways used in these areas is already close to that of developed countries. However, in the underdeveloped rural areas and the vast central and western regions, the radialization rate is still quite low. The good news is that the country is working hard to improve the living conditions in rural areas and invest more in infrastructure. If road conditions improve, all-steel tires may experience rapid development in these areas. From the macroeconomic perspective, investment will remain the major driving force for China’s economic development for a long time to come. A large amount of infrastructure needs to be constructed and improved, and it will bring about a large and continuous transportation demand.
In addition, a series of government encouragement policies, such as car purchase subsidies, have also effectively stimulated domestic consumption and will promote the development of all-steel tires. More and more drivers understand the advantages of all-steel tires, such as longer service life and safety, prefer to use all-steel tires, and gradually increase the use of all-steel tires.
Brand Technology Should Never Blindly Increase Production Capacity
Since the outbreak of the financial crisis last year, the demand for Chinese tire companies has dropped significantly due to the sharp decline in demand in both domestic and foreign markets. Until January this year, the entire tire industry started with less than one-third of all steel tires. Thanks to the government's large-scale investment stimulus plan, from April to May, tire production capacity has recovered rapidly, and the operating rate of all-steel tires has returned to more than 85% of normal levels.
However, due to the release of production by most tire companies, China’s monthly output of all-steel tires has reached 5.5 million from April to May, while domestic demand plus exports are estimated at about 5 million, and output growth is higher than the demand for tires. The inventory of tire companies has gradually increased, and it is not ruled out that the tire market may be downgraded in the short term. Therefore, tire companies should not increase production blindly, otherwise it will lead to serious excess production capacity in the future, and corporate profits will also be adversely affected.
In addition, China currently has more than 70 radial tire production enterprises. Among them, there are about 40 full-steel tire production enterprises, and the annual production capacity has reached 75 million. At present, the domestic demand for all-steel tires is less than 40 million. Although exports can solve more than 15 million production capacity, there is still a large amount of surplus production capacity. And the rapid growth of exports has also brought a lot of trade friction, so China's tire exports can not be unlimited growth.
Industry experts pointed out that the focus of all-steel tire development is not to continue expanding production capacity, but to increase product technology and brand awareness. Enterprises with leading technologies, quality, and brands in the country can gradually increase the technological level and competitiveness of the entire industry by integrating scale and capital, reducing waste of resources, and rationally utilizing resources. Relevant government departments may formulate policies similar to the consolidation and reorganization planning of the steel industry, encourage and guide the orderly merger and reorganization of the tire industry, and enable the tire industry to develop healthily.
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