◎ Chen Weifang
| In the first half of 2020, all major economic indicators of China’s rubber machinery industry declined, with sales revenue, export delivery value, profit, etc. all showing double-digit declines. Combining the current orders at hand of rubber machinery enterprises and the impact of COVID-19, it is predicted that the situation of rubber machinery industry will be relatively better in the second half of the year, but it is still difficult for the year-round data to become rising. The rubber machinery industry as a whole enters the bearish channel, and this trend will last until the first half of next year. |
Double-digit decline in operating revenue, and low operating rate in recent years
According to the major economic indicators counted by the Rubber Machinery Specialized Committee of China Chemical Industrial Equipment Association for the first half of 2020, 20 major rubber machinery manufacturers across China have achieved sales revenue of 2.49 Billion Yuan, a year-on-year (same below) decrease of 17.5%.
Calculating based on this, the sales revenue of China’s rubber machinery industry in the first half year has reached 3.72 Billion Yuan, a decrease of 19.5%.
As for main reasons for the decline in sales revenue, firstly, due to the impact of COVID-19, enterprises basically stopped production from February to April; secondly, orders were reduced, some traditional rubber machinery enterprises were seriously inadequate in production tasks, and the operating rate of the entire industry was at a historically low level; thirdly, finished products, especially export products, cannot be shipped and cannot be sold.
Among the 20 enterprises that reported data, 15 had a decline in sales revenue, with the highest decline being 76%. The total sales revenue of top ten enterprises was 2.156 Billion Yuan, accounting for 86.5% of the total sales revenue of the 20 enterprises. The concentration ratio of the industry increased by 13.2 percentage points, reflecting that the stronger is becoming much stronger.
COVID-19 has a relatively greater impact on small-sized rubber machinery enterprises. The operating rate and orders of rubber machinery enterprises that mainly produce non-tire rubber machinery were far from ideal. Relatively speaking, OTR tire equipment is more popular.
Fewer orders, and unsatisfactory profitability
According to statistics from the Rubber Machinery Specialized Committee, the profit of rubber machinery industry fell by 188%, the profitability was not satisfactory, and four enterprises had deficit.
Main reasons for the decline in the profit of rubber machinery industry include the sharp decline in sales volume, the inability to ship products, the increase in inventory, etc.
It can also be seen from the statistical data that the output value of new products in the industry has declined slightly. The number of employees continues declining, mainly driven by the improvement of industry automation degree and level; and at the same time some enterprises have implemented strategies to reduce staff and increase efficiency. Product sales rates have fallen, and inventory of finished products has increased.
In the first half of the year, the rubber machinery industry had a small number of orders, and for these limited orders, competition was fierce. It is predicted that the profit level of the industry in the second half of the year will hardly improve significantly.
Export value has dropped sharply, and it is difficult to improve during the year
According to statistics from the Rubber Machinery Specialized Committee, the export delivery value in the first half of the year was 441 Million Yuan, a decrease of 17.6%. From this, it is estimated that China’s export delivery value in the first half of the year was USD 85 Million, a drop of 15%; and the export rate (value) was 15.99%, an increase of 0.7 percentage points.
Enterprises with better export performance include MESNAC, Dalian Rubber & Plastics, Yiyang Rubber & Plastics Machinery, Guilin Rubber Machinery, Guilin Engineering Company, Fujian Tianhua Intelligent Equipment, etc.
Main reason for the decline in export delivery value is the impact of COVID-19. Inconvenient communication resulted in fewer orders. Stagnation of logistics and shipping, and internal and external blockade, had serious impact on product delivery and after-sales service. Considering that the epidemic situation has not yet been fully controlled and will last for some time, the export of rubber machinery will not be optimistic this year.
Among the overseas projects of Chinese tire enterprises, the construction of all-steel tire projects is basically proceeding as planned. The cancellation and delay of some semi-steel tire projects due to the US’s “anti-dumping and countervailing” investigations on Thailand and Vietnam is even more detrimental to China’s rubber machinery export.
In summary, it is predicted that the export delivery value of rubber machinery this year is quite probable to be in a relatively low level of recent years.
