China rubber firms suffer sales drops

QINGDAO, China (March 24, 2016) — China’s major rubber sector players suffered double-digit drops in sales and earnings last year, according to Deng Yali, chairman of China Rubber Industry Association (CRIA).

The major players’ sales and profits fell 11 and 17 percent, respectively, compared with 1.5- and 0.1-percent growth in 2014, Ms. Deng said in her speech at the 2016 China Rubber Conference in Qingdao.

China’s tire makers fared even worse, CRIA data show, with revenues and profits down 14 and 23 percent, respectively. Exports dropped 16 percent, according to the results of an association survey.

Five tire makers closed last year, taking 9.6 million units of annual radial tire capacity off line, or 81 percent of capacity shut down over the past five years.

The National Bureau of Statistics’ data showed slightly more optimism: The rubber sector overall had nearly $165 billion in sales in 2015, up 3 percent over 2014. Profit fell 2 percent to just shy of $1 billion, or an earnings ratio of just 0.6 percent.

During China’s 12th five-year plan (2011-2015), rubber sector revenue grew 9.6 percent annually, a sharp drop from 36-percent annual growth during the 11th five-year plan.

“Developed markets such as Japan and Korea have also had similar slowdown,” said Liu Peilin, deputy minister of the development strategy and regional economy department under the state council’s development research center.

“China’s ‘New Normal’ is a symbol of the country’s high industrialization level. We are not looking at an economic crash.”

CRIA Chairman Deng added that the sector has been optimizing its structure, with more environmentally friendly technology, increased proportion of high value-added products and improved product quality and variety.

Last year, green rubber additives took up 92 percent of the total production, and 91` percent of the country’s tire production was radial tires.

Ms. Deng said she expects China’s rubber sector to grow 7 percent in 2016 and continue growing at that pace annually throughout the 13th Five-Year Plan, ending in 2020.

“Now it’s a critical moment for us on our way to climb over the mountain,” she said.