The Tire Industry Will Usher in the Strictest Control in History

On November 5, the Government of Shandong Province officially unveiled the Implementation Plan for Accelerating the High-Quality Development of the Seven High Energy-Consuming Industries. According to the document, Shandong will vigorously clear the backward capacity in the market and promote the adjustment of tire industry layout.

The Newly-Added Capacity May Not Be Realized

According to the Shandong Government, it is imminent to adjust the structure of the seven traditional high energy-consuming industries, such as tire, steel and oil refining, so as to make the tire industry achieve the world-class level through industrial layout and optimization. In the future, the tire industry should strictly control the capacity and output on the basis of high-end development.

The document clearly states that the total capacity control policy will be established for the province's tire industry. In principle, the total tire capacity will remain basically unchanged until 2020, with an emphasis on efforts to reduce the province's bias tire output (from the current 35 million pieces to 20 million pieces). In the future, the production of tires that are not high-end, high value-added, or high-performance will be controlled.

In the previous documents issued by Shandong Government, relevant departments at all levels are prohibited from putting the tire projects with surplus capacity on record and handling procedures such as land supply and EIA approval for these projects, in order to resolutely prevent the construction of low-end and redundant capacity and control production scale. In addition, the construction of repeated capacity projects that have not been started shall not commence, and those that do not conform to the industrial policy shall be suspended.

According to the statistics, in 2017, a total capacity of 7.3 million pieces/a ofbias tire and 18 million pieces/a ofnormal radial tires (10 million pieces/a ofall-steel tires and 8 million pieces/a ofsemi-steel tires) were eliminated in China. Under the general trend of "de-capacity", this number will continue to increase.