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Tire makers feel deflated

By Li Fangfang (China Daily)
Updated: 2008-09-01 10:56

Aeolus Tire Co Ltd in Henan province is also challenged by the rising costs.

"Currently, our export volume is still moving up, however, the financial returns are going in the opposite direction," says export manager surnamed Xu at Aeolus Tire in Jiaozuo.

Spot prices of natural rubber rose about 30 percent in the first half, to 27,000-28,000 yuan a ton, traders says.

Moreover, by the end of May, the steel price index in China jumped 25.1 percent, according to National Development and Reform Commission.

"In the second half of this year, the price of natural rubber may increase another 30 percent to leaven raw material costs. We are enduring unprecedented pressure," says the official with Doublestar.

Analysts also believe that the change in the structure of the export tire market is also a reason for China's tire industry to fret.

"In the global market, the all-steel radial-ply tires are replacing bias ply tires. Therefore, Chinese tire makers like Doublestar that focus on the bias ply tires cannot progress as they did years before," says an analyst based in Beijing.

On the other hand, China's tire industry has been one of the industries that has suffered from international trade barriers most frequently in the past years.

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