National "Tire Industry Policy" issued to curb overcapacity

On October 11, the Ministry of Industry and Information Technology promulgated the "Tire Industry Policy" to encourage tire companies to upgrade their products through mergers and acquisitions, and set strict thresholds for the construction of tires for new construction, expansion and expansion projects in China to curb excess capacity in the tire industry.

It is understood that there are currently more than 1,000 tire companies in the country, and many private tire companies have the characteristics of “small, many, scattered, and low”. This time, the Ministry of Industry and Information Technology clearly stated that it encourages key enterprises with comparative advantages to merge and restructure difficult companies and backward companies through strong and strong alliances, brand sharing, production and sales, promote the concentration of resources to competitive enterprises, and promote the development of enterprises to collectivization and improvement. Industrial concentration, optimize the organizational structure; guide production enterprises to agglomerate development, optimize the layout structure; accelerate the elimination of outdated production capacity, promote product structure adjustment and optimization and upgrading.

In the "Tire Industry Policy", the intention to curb the overcapacity of the tire industry is very obvious. The policy points out that the construction of a new truck radial tire project will increase the production capacity to more than 1.2 million a year; the construction of light trucks with radial tires and passenger car radial tires will be newly built, expanded, and the production capacity should reach an annual output of 600. Ten thousand or more. Newly built, rebuilt or expanded heavy-duty trucks, light-duty trucks, and radial passenger car tires, and the single-species production capacity must also meet the above requirements. The "Policy" also clearly stipulates that, in addition to the relocation and technological transformation of existing enterprises (including mergers and acquisitions), during the industrial adjustment and revitalization planning period (2009-2011), no new tire projects will be built or expanded.

The "Policy" also proposes the future development direction of the tire industry, namely to encourage companies to develop safe, energy-saving, environmentally friendly high-performance radial tires, giant engineering radial tires, wide-section, flattened passenger radial tires and tireless radial truck tires. Radial tires were first invented by Michelin in 1946. Compared with ordinary diagonal tires, radial tires have the characteristics of small resistance, good adhesion, high elasticity, strong cushioning force, large bearing capacity, and wear-resistance.

The "Policy" clearly stated that in 2015, the radialization rate of passenger tires will reach 100%, the radialization rate of light-duty truck tires will reach 85%, and the radialization rate of heavy-duty trucks will reach 90%. In addition, companies need to focus on the development of engineered radial tires, aircraft radial tires, and low-speed vehicle radial tires.