Another round of price increases for tire enterprises is coming. Cooper Tire recently issued a price adjustment notice, which will increase the supply price of PCR products by 3% to 5% from March 23. Guangxi xinguilun rubber decided to cancel the preferential policies for the price of all steel products from March 1 and increase it as appropriate.
In the past year, tire enterprises have suffered from the attack from top to bottom, and the profit space has been further compressed. According to the statistics of the reporter of Securities Daily, as of February 22, more than 70% of the listed companies of tire enterprises with A-Shares that have disclosed the annual report and forecast of 2021 have seen a decline in net profit.
"From the current price trend of raw material market, natural rubber is still at a high level, which is also the main reason for the price rise of tire enterprises in the near future. It is expected that the whole relationship between supply and demand will be alleviated and an inflection point will appear in the second half of the year," Bai Wenxi, chief economist of IPG China, told the Securities Daily
tire enterprises shout "price rise"
According to the price increase letter of the above two enterprises, the continuous rise in the price of tire raw materials has led to the rise of the company's manufacturing costs, which has been unable to absorb the new costs through their own adjustment.
In the face of rising raw material costs, in fact, tire enterprises have raised prices one after another since the second half of last year, but even so, tire enterprises still failed to escape the fate of declining performance.
According to the data, as of February 22, of the 11 listed companies with A-Shares that have issued the annual report and forecast for 2021, except for 3 with good performance, the remaining 8 have suffered a sharp decline in net profit. According to the lower limit of the growth range of the forecast net profit, the net profit of the "worst" fell 1151.20% year-on-year.
In the performance report, most tire enterprises said that due to the continuous rise in the prices of main raw materials such as natural rubber, synthetic rubber, carbon black and steel cord, the operating costs increased significantly, coupled with the doubling of sea freight, and the further intensification of market competition in China, resulting in the impact of the rise in raw material prices not being fully transmitted to the downstream in time, Profit margins are squeezed.
The industry expects that the cost pressure of tire enterprises is expected to ease in 2022. According to the research report published by Guosen Securities Co.Ltd(002736) , with the correction of the dual control policy of energy consumption, the prices of some bulk commodities have stabilized and declined. At the same time, the container supply is gradually increasing, and the pressure of tire enterprises on the overseas supply side will also be relieved.
According to the data of business agency, as of February 21, the latest spot price of natural rubber was 13490 yuan / ton, down from 13748 yuan / ton at the end of 2021, a decrease of 1.88%.
Besides the pressure on the cost side is expected to ease, on the downstream demand side, according to the data released by China Automobile Industry Association, China's automobile production and sales in January this year were 2.422 million and 2.531 million respectively, with a year-on-year increase of 1.4% and 0.9% respectively.
Zhu Zhiwei, an analyst of Longzhong information tire industry, told the Securities Daily: "affected by external factors, the resumption of work of enterprises in many places in the north is delayed, the start of logistics and transportation is slow, and there is no obvious turnaround in the production and sales of new cars. The industry is not optimistic about China's replacement and supporting market in the first half of the year."
accelerated clearing of backward production capacity
The backward production capacity of the tire industry is still being further cleared. Recently, Shandong Provincial Department of industry and information technology issued an announcement on promoting the withdrawal of backward production capacity in Shandong Province in 2021, which mentioned that a total of 675 enterprises in Shandong Province eliminated 4516 sets of equipment and production lines in 2021.
At the beginning of 2021, Shandong Province issued the notice on the implementation of the "three resolute" action plan (2021-2022), involving the withdrawal of backward production capacity of the tire industry. By 2022, all enterprises with an annual output of less than 1.2 million all steel radial tires and less than 5 million semi steel radial tires will be integrated and withdrawn.
According to the document, there are 18 enterprises involved in this round of tire industry in Shandong Province, including 8 all steel tire enterprises, with a total production capacity of 5.56 million; There are 10 semi steel tire enterprises with a total capacity of 25.61 million. It is understood that the current round of clearance capacity accounts for 3.96% of the existing semi steel tire capacity and 3.03% of the whole steel tire capacity.
"Shandong will accelerate the clearing out of backward production capacity in the tire industry, which will reduce the overcapacity of the whole tire industry, promote industrial upgrading and price stabilization, and promote the benign and sustainable development of the industry." Bo Wenxi pointed out.
While the clearance of backward production capacity is accelerating, the head tire enterprises are accelerating the "going to sea" to expand production. According to the statistics of projects under construction of tire enterprises, China's first-line tire brands are accelerating the pace of production expansion. Among them, Shandong Linglong Tyre Co.Ltd(601966) there are up to 5 construction projects in China; Pulin Chengshan, Michelin and other enterprises also have new or under construction projects.
"It has become a trend for Chinese tire enterprises to expand production overseas." Western Securities Co.Ltd(002673) Yang Hui, chief analyst of the chemical industry, told the Securities Daily, "previously, the production in Thailand, Vietnam and other countries was relatively successful, and now the construction and production in Serbia, Spain and other places have also made progress."
