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GLOBAL TYRE REPORT CRIA outlines direction of Chinese rubber industry ‘ China will build a Tyre City to help Chinese companies to develop technologies and branding expertise to win a powerful place in the world economy ’ Fan Rende A number of meetings and reports from China’s Rubber Industry Association (CRIA) in November highlighted a series of concerns within the industry and also identified strategies to overcome those issues. By David Shaw, ERJ Staff, dshaw@crain.com Speaking at CRIA’s official meeting in late October, Fan Rende, president of China Rubber Industry Association, noted that the global economy is in a turbulent time and this is affecting growth of the rubber industry. He also pointed to the debacle at Kumho Tianjin tyre factory and said this should act as a spur to all participants to improve quality in the industry. Fan Rende pointed to the development of Rubber Valley and said China would build a Tyre City to help Chinese companies to develop technologies and branding expertise to win a powerful place in the world economy. In a seven-point plant, Fan Rende called for Chinese companies ● to look to their quality and develop management and production practices; ● to ensure good quality; ● to create low-rolling resistance tyres; ● to build a strong, worthwhile R&D base in the country to support future developments; ● to speed the construction of the Rubber Valley region in Qingdao; ● to optimise production of natural rubber and gutta-percha; ● to extend co-operation with the international rubber industry and ● to create a positive rubber exhibition and conference in China. At the same meeting, other speakers said China’s tyre and rubber industry has entered the high cost era, and faces a situation of three shortages and two high costs. The three shortages are people, capital and power. The two high costs are materials and taxes. As a result, suggested speakers, continued growth of China’s tyre industry may be restricted. In the first nine months of 2011, China’s tyre industry has already seen significant losses at certain tyre makers and as a result complete or partial shut-downs of factories. Although revenues increased due to higher prices, the average net margin at the top tyre makers in China fell to just 1.5 percent. A speaker from Qingdao Doublestar said the company is having to restrict output due to labour shortages. This has reduced output by some 10 percent this year, he said. Ma Shichun, executive chairman of Guizhou Tyre Co. Ltd, said the priorities are to continue with scientific development, and also the industry needs to consolidate more, as there are too many small factories producing a range of tyres. He suggested that Chinese companies should not attempt to compete on low cost, but on high technology. Just two weeks later, on 8-9 Nov, China Rubber Industry Association (CRIA) held its annual council meeting in Nanchang City. The China’s SR industry grows to world’s biggest conference theme was “energy saving, environmental protection, quality, management, and efficiency”. General Secretary of CRIA, Deng Yali, told delegates that increasing protectionism will make it harder for Chinese companies to export tyres to Europe and other countries. The 300 delegates elected officers for the association. Key presentations were by Secretary-General of CRIA Deng Yali, who reported from the Bureau meeting held late last month in Guizhou, where the Bureau said China is entering the era of high cost production. A Reuters report, published on CRIA’s website, quoted Li Yongwu of the China Petroleum and Chemical Industry Federation saying China’s rubber industry has achieved a great deal, including a high rate of radialisation, and modern products in the conveyor belt and high pressure hose segments. Despite this, he noted that there are still challenges for China. The main one is that Chinese products – especially tyres – are still perceived as at the low end of the quality spectrum and no Chinese company has earned the credibility to discuss issues at a global scale. Most domestic companies are at the stage of manufacture only, with little long-term strategic vision. China will therefore create the conditions to nurture and develop existing companies so that they can form the required management, vision and capital structures needed to become world leaders. While the industry has seen much success in tyres, Li Yongwu suggested that non-tyre automotive markets offer major opportunities to Chinese manufacturers. Ding Ningning of the State Council Development Research Center presented an economic picture of the world economy. Fan Rende, president of CRIA, said the industry should focus on the industrial development of the green tyre as part of the national strategy of low-carbon economy, and also as a precursor to the introduction of tyre labelling regulations in the EU and elsewhere. Deng Yali said China’s rubber industry will keep growing this year, but at a slower rate than in the past. She said tyre production is expected to increase by about 5 percent, and tape production increased by about 10 percent. ■ BEIJING – China says its synthetic rubber industry is now the world’s biggest. A meeting of the governing body of the China Synthetic Rubber Industry Association said China, at the end of 2011, has capacity to make 3.33 million tonnes of synthetic rubber. Of this, 520 000 tonnes was brought on stream this year. The data was presented by China Synthetic Rubber Industry Association executive director Hu Jie at the meeting in Xi’an on 8-9 Nov. Hu Jie said productivity is also the world’s highest. China expects the output from these plants to total 2.7 million tonnes in 2011. By the end of the current 5-year plan, capacity is set to reach 6 million tonnes. However, Qi Yun Tong, secretary general of synthetic rubber federation, said the supply of isoprene and butadiene monomers may restrict further growth, and creating increased supply of these monomers is a high priority for the industry. Qi Yun Tong also said there is an urgent need for more capacity for solution-SBR in the country, as tyre makers begin to make more energy-efficient tyres. In addition, he called for more butyl rubber and on the non-tyre side, more EPDM, nitrile and HNBR capacity. Chinese statistical data shows that China’s tyre production in October reached 74.58 million units, up 19 percent on the same month a year ago. In the January - October period, tyre production was 6831 million units, or 8 percent ahead of the previous year. The same statistical data showed October’s output of synthetic rubber was up by 14 percent to 2.87 million tonnes, while production in the first ten months totalled 26.6 million tonnes, up 3.1 percent on the same period a year ago. xiv E U R O P E A N R U B B E R J O U R N A L NOVEMBER/DECEMBER 2011
www.europeanrubberjournal.com Aeolus unveils environmental initiatives The pressure for less environmentallydamaging tyres is spreadng around the world. In August, Chinese tyre maker Aeolus Tire held a media day designed to demonstrate its ‘green’ credentials to a media accustomed to regarding Chinese tyres as unsophisticated. By Jeff Yip Aeolus Tyre Co. Ltd is going green. That was the overriding message the Chinese tyre manufacturer wanted to convey to dozens of VIPs, including government and industry officials and global business partners, invited to a recent conference in Jiaozuo, China, on its environmental initiatives. The company discussed three initiatives that could hold a key to the company’s future: ● A sprawling new factory; ● A new line of truck tyres that Aeolus claims deliver up to 7-percent better fuel economy; and ● The addition of passenger tyres to its portfolio, both for export and China’s booming consumer market. The manufacturer’s new Aeolus Green Tyrebranded (Agt) tyres—targeted initially at the European market—will be kinder to the environment in several ways. Not only will tyres bearing the Agt label comply with the European Union’s REACH limitations on toxic polycyclic aromatic oil, they will feature lower rolling resistance that will pay off in improved on-road fuel economy, Aeolus executives said. US customers could see the improved products by next summer, according to Alliance Tire Americas Inc., the Chinese firm’s exclusive US distributor for its truck and OTR tyres. “I anticipate we will see green production truck tyres in the US by mid-year 2012, with more sizes and patterns released throughout the year,” said John Hull, Alliance national tyre sales manager. The tread patterns, he added, will probably not be the same as the Euro-spec tyres. Alliance Tire previewed the line at the recent Great American Trucking Show in Dallas. The Agt is made using state-of-the-art methods and technology that are safer for plant workers, conserve resources, and reduce noise and harmful emissions, according to Aeolus. Some specific changes include preprocessing of chemicals into pellets and wet pelletising carbon black to reduce dust emissions. Aeolus’ ‘green’ approach tackles environmental concerns on several fronts. More automation and low-temperature processes will reduce energy consumption, gas emissions and waste water, thanks to an enclosed water recycling system. www.machinerypartsstore.com The manufacturer has set lofty goals for the new line of tyres, including 30-percent longer lasting tread life through new tread compounds and design, optimising the tyre’s footprint and pressure distribution. Behind updated styling will be materials that help the tyre run cooler and vector balancing of green tyres during curing that will improve uniformity and balance. Part of the green program means tyres receive rigorous inspections, including X-ray and dynamic testing. The truck products also will be more suited for retreading, Aeolus said, because of the use of oxidation-resistant sidewall compounds, 100-percent bromobutyl innerliners and a four-steel-belt construction. Aeolus also touts partnerships ‘ with Bekaert SA for steel cord and Cabot Corp. for carbon black. Wang Feng, Aeolus’ vice president and general manager, said through an interpreter that the company is out to shatter what he calls pervasive—and in Aeolus’ case—unfair perceptions in the US that Chinese tyres are synonymous with lower quality and lumped in with fourth-tier suppliers. “It is Aelous’ intention to be one of the top 10 manufacturers in the world,” he said. “We’re focusing on overseas markets.” While going green means higher production costs, Wang said, “We don’t want to give burdens to our customers. We will have promotions to teach dealers how to sell the added value of their green tyres.” Wang, who has an engineering background, said the regulations aren’t the only reasons why Aeolus is very “willing to take the social responsibility to go green.” “You can see all the workers and the staff on the production lines have very tough work,” he said. “We think that human beings, wherever they work, should have a clean environment. You can see things opening and the reforms taking place in China. The national view for the environmental protection and focus on healthy protection has increased a lot. People know that every factory should be human-being orientated.” He said it should be noted the US Environmental Protection Agency said it “does not have, nor is it developing regulations or guidelines to limit the amount of polycyclic aromatic hydrocarbons which may be present in tyres or extender oils used in the manufacture of tyres.” Aeolus, whose parent company is China National Chemical Corp. (ChemChina), had speeches and a panel discussion on its Agt program. Alliance Tire has been Aeolus’ US distributor since 2010, when it bought the assets of bankrupt GPX International Tire Co. Alliance markets the Aeolus-brand tyres through its wholesale and full-service dealers, said John ’ Hull, a truck tyre veteran who runs Alliance’s Aeolus truck tyre program. Dynamic Tire Corp. of Brampton, Ontario, handles the brand in Canada. Hull said he has been impressed with Aeolus’ product quality as well as the responsiveness of the company’s research and development staff. Comparisons of different Chinese tyre cross-sections have shown that the Aeolus products’ belt packages have good uniformity and consistency, which help preserve the integrity of the casings. “Seeing is believing, even when you are talking about tyres,” Hull said. “Ultimately, performance is measured on the truck, but it sure helps to give confidence to the sales people that Aeolus is a cut above the competition. “The best thing we can do for Aeolus is give them good market data so we can stay competitive,” he added. “This, along with solid performance data, is critical. We have worked with R&D on new tread patterns and a few new applications, as well as rolling-resistance testing for SmartWay certification.” Aeolus’ new $150 million tyre factory in Jiaozuo already is at full production, making 80 000 radial off-the-road tyres annually. Production of radial passenger tyres will start early next year, with a rated annual capacity of 8 million tyres. Employment will hit 3000 at full capacity. Aeolus’ original factory, built in 1965 and staffed with about 5000 employees, produces up to 5 million radial truck/bus tyres and 600 000 bias OTR tyres per year. ■ You can see all the workers and the staff on the production lines have very tough work. We think that human beings, wherever they work, should have a clean environment Wang Feng NOVEMBER/DECEMBER 2011 E U R O P E A N R U B B E R J O U R N A L xv
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