◎ Chen Zhihai, Secretary-General of Cycle Tire Branch of CRIA
| From Q2, the economic operation of cycle tire industry has gradually emerged from the haze of COVID-19 and is accelerating its normalization. It is predicted that the production and sales volume of all leading products of the industry in Q3 will basically rebound to the level of the same period last year, and the overall growth is expected to be achieved throughout the year. |
Domestic Market is Accelerating to be Better
Under the influence of the sudden outbreak and rapid spread of COVID-19 at the beginning of the year, the production and operation of the industry in Q1 were greatly hindered, and the main economic operation indicators dropped significantly. With enterprises of the industry actively responding and making various efforts, the industry basically resumed production from the end of February to the beginning of March. Production and sales were gradually stabilized and improved in March. In April, several key enterprises, including Sichuan Yuanxing Company, Zhongce Rubber Group, and New Dongyue Group, took the lead to improve the profitability. In May, the monthly production and sales volume growth of the four leading products in the industry accelerated.
As of the end of June, the output of bicycle tire casing and electric bicycle tire of key member enterprises has turned from negative to positive, and the decline in the output of motorcycle tire casing and comprehensive inner tubes has also been significantly narrower than that in Q1. It should be noted that with the gradual contraction of rural motorcycle market and the increase in the proportion of tubeless motorcycle tire and electric bicycle tire products, even if the impact of epidemic is excluded, it will not change the development trend of gradual decrease in the output of comprehensive inner tube.
As for OEM market, according to statistics from relevant departments, three major downstream finished automobile industries have stabilized and rebounded, and the decline in output has continued to narrow. In the first half of the year, the output of electric bicycles of enterprises above designated size increased by 10.3%, the output of two-wheeled bicycles increased by 1.9%, and the output of motorcycles decreased by 8.6%, which was 14.5 percentage points lower than that in Q1.
As for domestic maintenance market, as China has entered the normalization of epidemic prevention and control, the market consumption of cycle tire products that are closely related to the daily life and production activities of the public has gradually returned to normal, and the main-tenance market operation activities have basically returned to normal as well.
Judging from the economic performance of key member enterprises in the first half of the year, under the super-position of two favorable factors, i.e. the accelerated recovery of industry production capacity in Q2 and the basically stable price of natural rubber and other bulk raw materials, enterprises of the industry, especially leading enterprises, have better showed their advantage of scale benefit, and driven the gradual recovery of the overall operating quality of the industry.
Slow Recovery in Overseas Markets
In terms of product exports, due to the rapid spread of global epidemic, export business was blocked. According to statistics from the General Administration of Customs, the export delivery volume of motorcycle tire casing and inner tubes in China decreased by 9.2% and 6.1% respectively in the first half of the year; and the export delivery volume of bicycle tire casing and inner tubes decreased by 26.9% and 12.4% respectively. The decreasing amplitude in exports in the first half of the year narrowed by 3.4 percentage points compared with that in Q1, and the export of bicycle tires recovered better than that of motorcycle tires.
In terms of international market, according to media reports, a new upsurge of bicycle riding is emerging in major EU member states during the epidemic and after the “lift of lockdown”, and the demand for bicycle has soared. In addition, motorcycles and electric bicycles are still the daily needs of the general public in the vast number of developing countries and regions. In the post-epidemic period, the demand of traditional international market for China’s cycle tire products will gradually return to normal.
Industry Operation is Expected to Return to Normal in the Second Half of the Year
Based on the above situation, it is forecasted that the economic operation of cycle tire industry in the second half of the year is as follows:
1. In the first half of the year, the overall economic operation of China’s cycle tire industry is basically in line with the operating trends of main economic indicators from key member enterprises of Cycle Tire Branch during the same period. However, some enterprises that are on the verge of closure and some foreign trade enterprises encountered greater difficulties after the outbreak of epidemic.
2. With the support of the traditional peak sales season in Q3, the output growth rate of China’s bicycle tire and electric bicycle tire will continue in the second half of the year. The operation of key enterprises in the industry is expected to basically return to the same period last year in July or August. The completion of several indicators such as production and sales volume of electric bicycle tire is expected to be better than expected.
3. In the current situation of global epidemic raging and international trade environment deteriorating, the export of cycle tire products may still be adversely affected. However, if the response is appropriate, and the great business opportunities in post-epidemic period are well grasped, the degree of influence may be gradually weaken with the support of government’s new supportive policies.
4. The sudden outbreak of epidemic has greatly adversely affected the operation of the industry, while at the same time has accelerated the process of industry structure adjustment to a certain extent. Enterprises with strong anti-risk and innovative capabilities in the industry will take more initiative in the second half of the year and the next stage of development.
