The performance of tire production and sales in 2018 was not satisfactory. Due to the impact of environmental protection and the high prices of some rubber raw materials, the production costs of tire manufacturers continued to increase. Prices were raised three times during the period. It may drop. In 2019, the policy of exempting new energy vehicles from purchase tax is still being implemented. However, in order to promote the development of the automobile market in the past few years, the reduction of purchase tax has been implemented half a long time ago. The consumption of the automobile market is seriously overdrawn in advance. It is difficult for the car purchase policy to promote the continuous negative growth of the auto market this year. The downstream demand for tires continues to be weak. The enthusiasm of agents to obtain goods is difficult. In addition, the current domestic economic situation is down. It is expected that the overall trading atmosphere in the market is weak and the pressure for improvement is great. Carefully pay attention to the guidance of further trends in raw material prices and changes in relevant national policies.
The tire industry in 2019 has the following trends:
First, for the market, the price of natural rubber in 2018 is in a low range. The price of natural rubber may rebound slightly in 2019, but due to weak market demand, the rebound is limited, and it does not support the production costs of tire manufacturers. In terms of synthetic rubber, the domestic environmental protection situation is still grim in 2019, and the start of synthetic rubber equipment is limited, and the price may rise, which may drive the tire market price slightly.
Secondly, automobile sales may increase slightly. China officially released a news. From January 1, 2019, the country will officially supply National Six standard oil, which means that National Six emission standards will be formally implemented. The auto market is expected to pick up, forming a slight support for the tire industry.
Third, the "revolution of iron and water" was implemented, and the demand for tires weakened. At the regular briefing of the State Council's policies held in the middle of the year, relevant officials of the Ministry of Transport introduced that the main direction is to promote the "transit of iron and water by public transport" for bulk cargo transportation. Through three years of concentrated attack, it will achieve national railway freight transport by 2020. Compared with 2017, the volume increased by 1.1 billion tons, an increase of 30%, the waterway freight volume increased by 500 million tons, an increase of 7.5%, and the coastal port bulk cargo road transportation volume decreased by 440 million tons. Starting in 2018, six major actions will be implemented nationwide: railway capacity improvement, water transport system upgrade, highway freight management, multimodal transport speedup, information resource integration, and urban green distribution. Therefore, under the implementation of the “transition of iron and water” policy in 2019, the downstream demand space for tires has been compressed, and the market situation is difficult to be optimistic.
Fourth, domestic illegal construction and dismantling are serious, and tire stores have decreased. This year, strict inspections of illegal buildings were carried out in China. Some small shops along the streets were dismantled, and tire stores were mostly located in areas with a lot of traffic along the streets. Therefore, the large-scale demolition of illegal buildings in China has reduced the number of tire stores. Construction inspections remain stringent and retailers are under pressure.
Fifth, with the continuous popularization and improvement of e-commerce platforms, tire sales methods and methods have increased, and they have become more flexible. The continuous expansion of online sales has reduced the cost pressure on agents and retailers in some stores, and has greatly improved publicity efforts. It has even been heard that some manufacturers want to be closer to the terminal market and shorten the distance with end customers, so online sales may become their choice. In the real market environment of price wars, the pressure on e-commerce will increase.
Sixth, under the influence of the Sino-U.S. Trade war and the Federal Reserve's interest rate hike in 2018, the yuan depreciated severely. The exchange rate of the yuan against the US dollar has been rising all the way to the seventh pass. The devaluation of the yuan will have a certain impact on domestic commodity exports. As of now, the Sino-U.S. Trade war has not yet been settled, and it may continue in 2019. The exchange rate is relatively limited. Domestic tire exports will still support manufacturers' shipments, but since October 18, some manufacturers have avoided Risks and preemption of the market have started to process U.S. orders, which were basically processed in mid-November. This is an early overdraft of U.S. orders in 2019. Therefore, even if the United States does not impose a 25% tariff on imported goods to China, the number of exports to the United States may cut back.
Seventh, Li Keqiang, the Premier of the State Council, hosted an executive meeting of the State Council on October 8, 2018 to determine measures to improve the export tax rebate policy and speed up the progress of tax rebates to reduce the burden on enterprises and maintain stable growth in foreign trade. The meeting decided that starting from November 1, 2018, the current export tax rebate rate of goods will be increased from 15% and 13% to 16%; 9% to 10%, and some of them to 13%; 5%. Raise to 6%, and some to 10%. The meeting also determined that in order to further speed up the tax refund process, simplify export procedures and shorten the tax refund time for export companies with high credit ratings and good tax records, comprehensively implement paperless tax refund declarations, and improve the efficiency of tax refund review. Optimize tax refund services, help companies collect documents to declare tax refunds in a timely manner, and achieve full network coverage of electronic refunds as soon as possible. The increase in export tax rebate rates and the promotion of the Belt and Road Initiative are still factors that are favorable for tire exports in 2019.
Eighth, anti-dumping duties on tires from various countries in China continue to suppress export pressure. The U.S. International Trade Court announced that it would request a retrial of the "double-reverse" ruling on the China Truck and Bus tires in 2017. In the context of the current Sino-US trade war, the results may not be optimistic. Not only the U.S. side, the European Commission also passed the final ruling on the countervailing of Huaka buses in November 2018. The double countermeasures will be implemented for five years, and India and other countries also have anti-dumping measures against China's tires. The year is difficult to be optimistic.
Ninth, in August 2018, the Shandong Provincial Party Committee and Provincial Government issued the "Three-year Action Plan for Strengthening the Prevention and Control of Pollution Sources and Promoting the" Four Minus and Four Increases "(2018-2020)". According to the plan, from 2018 to 2020, the Shandong tire industry should further increase the meridianization rate and industrial concentration, enhance brand value, and improve quality and efficiency. The province plans to gradually reduce the production of bias tires, focusing on creating enterprise groups with sales revenues exceeding 10 billion yuan, and supporting key enterprises to enter the top 10 in the world. It is understood that there are many ways to reduce production capacity in Shandong Province. The main methods focus on energy consumption, environmental protection, quality, safety, technology and other aspects. It is expected that in 2019, Shandong will eliminate the backward production capacity of tires and continue strictly.