Sep All-Steel Tire Sales Likely to Rise and Inventory May Drop
Introduction: In September, the total inventory of all-steel tire is expected to decline. Despite certain production and sales pressure in the market, the sales volume may still increase driven by the traditional demand peak season. At the same time, affected by the Aid-Autumn festival and National Day holiday, the supply pressure may be alleviated, and the pressure on all-steel tire inventory may weaken somewhat.
All-steel tire inventory is likely to move down.
In September, the total inventory of all-steel tire at sample enterprises is predicted to slide. First, some enterprises cut production in the previous period to provide a low base of capacity release in September. However, due to the Mid-Autumn festival and National Day holiday, some sample enterprises have shutdown plans, so the supply pressure weakens somewhat, reducing the tire inventory pressure. Second, facing the quarterly sales task, dealers usually restock in advance to complete the sales target, which drives the consumption of tire inventory. Third, bolstered by the traditional peak demand season in September, more market resources flow to the end-user market, which is conducive to the transmission of inventory. Fourth, although the overseas demand shows a slowdown trend, the stage-by-stage order delivery helps the inventory decline.
All-steel tire output may increase amid low base in September.
In August, some enterprises cut production because of insufficient market demand, high feedstock prices, high inventory, and regular equipment maintenance, leading to a decline in overall output and forming a low MoM base. In September, tire enterprises resumed normal production, and output showed a recovery growth. However, due to holidays, some sample enterprises plan to stop production and take holidays, which will shorten the production time, reduce the market supply, and alleviate the pressure of tire inventory.
Tire replacement demand may grow backed by seasonal characteristics.
Although the current demand for the all-steel tire replacement market is still weak, and the consumption of tires is limited by the poor operation of the downstream infrastructure and real estate industries, the seasonal factor is still the main driving force for the increase in sales on an MoM basis. Usually in the traditional demand peak season (September and October), the market will enhance promotion efforts to complete the quarterly or annual sales target, stimulate market demand, and encourage market players to restock in advance, improving the demand for substitute tires.
Car enterprises maintain normal production, and matched demand may strengthen MoM
In September, the production of commercial vehicles is still expected to increase, but the YoY decline may further widen, and its tire matching volume will show synchronous growth. The main driving factors are as follows. First, at the end of the third quarter, car enterprises usually increase production to ensure the completion of the quarterly production plan, driving the growth of production. Second, after the previous sales and demand fluctuations, the inventory level of car enterprises may decrease. Considering the uncertainty in the market, car enterprises actively replenish inventory to ensure the stability of the supply chain. Third, the export of commercial vehicles still shows strong growth potential, which provides certain support for the increase of commercial vehicle output. Based on this, the change trend of all-steel tire matching volume will be synchronized with that of commercial vehicle output.
Export volume may weaken amid slowed overseas demand.
As seen from the export performance this year, with the gradual alleviation of tight logistics capacity, the export of all-steel tires hit a historical high in June. After that, the export volume of tires may fall, mainly due to the release of previously accumulated orders while the insufficient new orders. The export of all-steel tires is expected to fluctuate downwards in September, with a potential decline in the export volume MoM.
In general, SCI reckons that the operating rate of all-steel tire enterprises may recover but still be lower than the same period of previous years. At present, domestic market demand remains weak, and the overall operating rate may be depressed amid unsmooth sales. At the same time, given the increment of the domestic all-steel market and replacement market, the total tire sales may rise, alleviating the tire inventory pressure.
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