2023 is an unforgettable year. After three years of epidemic dissipation and smooth transition of prevention and control, the rubber industry has seized the opportunity of the continuous introduction of national policies and the stabilization of the economy, showing strong development resilience and delivering satisfactory results in the post-epidemic era. With the strong momentum of new energy vehicles, Chinese tire brands have broken through the siege and reversed the situation where passenger cars are dominated by foreign brands. The internationalization process has accelerated, overseas projects have continued to increase investment, and product production and sales have been booming, becoming a strong engine for the parent company's performance growth.

Faced with the complex and severe international environment, the continued slowdown of the global economy, the increasing instability and uncertainty factors, and the situation where multiple domestic factors are intertwined and the downward pressure is still large, the entire industry has gone all out and successfully passed the twists and turns and complex 2023.

The China Rubber Industry Association has sorted out the top ten news in the industry, which are a microcosm of history and a witness to history.

Review 2023, pay tribute to the old year, and forge a new journey.

1. The rubber industry is resilient and "builds a strong foundation"

In 2023, with the intensive implementation of the national package of policies to stabilize growth, expand domestic demand, promote consumption, and boost the private economy, the foundation for the recovery of the rubber industry economy will be further consolidated. According to statistics from the China Rubber Industry Association, from January to October 2023, the output value, sales revenue, and export delivery value achieved a significant increase. The profit increased by 24.50% year-on-year (the same below), and the sales revenue profit margin was above 4.75% for 8 months, peaking at 6.43% in September. The number of loss-making enterprises decreased by 2.15%, and the inventory of finished products decreased by 6.55%, showing a strong resilience in economic development.

In terms of output, according to statistics from the Tire Branch, from January to October 2023, the capacity load rates of all-steel tires and semi-steel tires were 73.7% and 80.4%, respectively, an increase of 10.5 and 10.6 percentage points year-on-year, respectively. The market demand for semi-steel tires is significantly better than that of all-steel tires.

The prices of major raw materials were in a downward trend in the first half of the year, and continued to rise in the third quarter, leading to a wave of price increases in the tire industry. Despite this, in the first 10 months, the profits of carbon black, rubber additives, and steel cords still showed a significant year-on-year decline, with carbon black down 14.99%, additives down 7.45%, and skeleton materials down 2.90%.

2. Historic achievements in the joint construction of the "Belt and Road"

In the 10 years since the "Belt and Road" initiative was proposed, my country's rubber tires have truly "gone out" and achieved international development, with significant achievements and extraordinary significance.

In order to further improve the global strategic layout, realize localized production, and better meet the needs of global users, overseas bases will expand their investment scale in 2023. Among them, Sailun Group, Linglong Tire, and General Shares have formed a "dual overseas base" development pattern. Sailun Vietnam Phase III, Guizhou Tire Vietnam Phase II, Hailide Vietnam Phase II, General Shares, Sentury, Funo Group, Xingda Shares and other companies' Thailand Phase II, Doublestar Tire Cambodia Factory, Chaoyang Langma Pakistan Factory are all progressing in an orderly manner, and the Thai factories of companies such as Senorg Chemical, Quecheng Silicon, and Zhiyi Zinc Industry have formed supporting supply capabilities.

In 2023, the overseas layout will continue to expand outward, starting the construction of the next "golden decade". Sentury Tire Morocco project started construction, becoming the first company in my country to build a tire project in Africa. Sailun Group signed a contract for the Mexico project, becoming the first company in my country to build a tire project in North America. After the all-steel tire project, Jinyu Tire (Vietnam) also laid the foundation for the passenger tire project at the end of the year. Haomai Technology Thailand Phase II and Cambodia Company opened simultaneously to provide supporting services for overseas tire companies. General Shares decided on December 27 to invest 1.498 billion yuan to build the Cambodia Phase II project. Haohua Tire, Fumax, Wanli Tire, Yuelong Tire, etc. are all interested in building factories overseas.

3. Industrial upgrading fosters "new momentum", and new investment hotspots emerge

In 2023, my country's automobile production and sales hit a record high, new energy vehicles continued their rapid growth momentum, the automobile export market hit a record high, and the industry scale entered the 30 million level. This provides an important opportunity for new energy vehicle tires and non-tire rubber products to overtake on the curve.

Sailun Group uses liquid gold technology to create passenger car tires and commercial vehicle tires. Zhongce Rubber has launched the "Xia" series and No. 1 EV PRO high-end new energy tires. Linglong New Energy Tire's supporting share is far ahead and has launched the new Linglong Master series. Triangle Tire, Double Coin Tire, Wanli Tire, Senqilin, Prinx Chengshan, Guizhou Tire and other tire companies have also continuously launched high-end series products and new energy series products.

The pace of adjustment of my country's tire product structure has accelerated, and new investment directions have emerged. Tire companies generally adjust or withdraw from the production capacity of all-steel tires with low product gross profit margins, and switch to passenger tires or special tires to promote high-quality development of the industry.

For example, Sailun Group's Qingdao factory adjusted its off-road tire product structure to specifications of 49 inches or more (including 49 inches), involving a production capacity of 40,000 tons/year. Linglong Tire Company proposed a "3+3" global strategic plan for off-road tires before 2030. The first tire of Jilin Linglong's engineering radial tire rolled off the production line. Guangxi Linglong has already accepted 60,000 sets/year of production capacity and plans to expand its production capacity to 110,000 sets/year. General Shares adjusted the full-steel tire production capacity of the Wuxi factory, built a 6 million/year semi-steel tire and 100,000/year engineering tire technical transformation project, and terminated the Baotou tire project. Zhucheng Yong'an withdrew from the production capacity of 1.2 million sets of full-steel tires and 6 million sets of semi-steel tires, and built an annual production capacity of 100,000 tons of off-road tires. Double Coin Group (Jiangsu) launched a full-steel engineering radial tire capacity improvement project, Double Coin Group (Anhui) built a second-phase passenger tire project, and Fengshen Tire invested in a giant tire capacity expansion and efficiency improvement project. Guizhou Tire terminated the "3 million sets of all-steel tire intelligent manufacturing project" to raise funds and turned to the annual production of 380,000 all-steel engineering tires, and the first tire rolled off the production line. Wanli Tire's goal is to increase the annual production capacity of semi-steel tires from the current 24 million to 36 million by 2025, and the annual production capacity of all-steel tires from 2.4 million to 4.8 million. Bridgestone announced the closure of its commercial vehicle supporting sales business in China. Michelin has increased its efforts in passenger tire project construction, such as the second phase of the Shanghai factory expansion and renovation to create a super flexible, green and intelligent future factory; expanding the Shenyang factory's annual production capacity of 1.3 million. Sumitomo Rubber's truck and bus tires in China have been orderly withdrawn.

4. Product exports "flowers bloom inside the wall and are fragrant outside the wall"

This year, the domestic replacement terminal market sales have not improved much, but the overseas export market is particularly enchanting, making up for the gap in domestic consumption and becoming an important driving force to support the sales increase.

According to statistics from the China Rubber Association, from January to October, the industry's export rate (value) was 37.59%. Among them, tire exports maintained a high growth trend, and the export rate (value) remained above 50% for several consecutive months. For other majors, latex was 42.37%, rubber machinery molds were 39.36%, rubber additives were 31.95%, and skeleton materials were 29.84%, accounting for more than 30%.

According to statistics from the General Administration of Customs, from January to November, my country's exports of new pneumatic rubber tires were about 564 million, an increase of 11.4%; the export weight was about 7.86 million tons, an increase of 16.8%; the export delivery value was 137.51 billion yuan, an increase of 20.3%. The export of engineering industrial tires has become a unique existence. In the first 10 months, the export weight was 329,000 tons, an increase of 35.5%; the export delivery value was 1.07 billion US dollars, an increase of 44.4%. The average export price was 3.25 US dollars/kg, an increase of 6.6%, which was in sharp contrast to the price decline of other tire series.

5. New breakthroughs in dealing with trade frictions

As the world economic growth slows down, the cyclical fluctuations in the global tire market have entered a downward range, and Europe, the United States and other countries have frequently introduced trade relief measures against my country.

On February 1, 2023, the Eurasian Economic Commission made a final anti-circumvention tax decision on my country's anti-dumping case against truck tires; on March 30, it made a final tax decision on the review of the change of circumstances in the anti-dumping case against my country's truck tires. On April 4, the European Commission made a final ruling on the re-investigation of the "double-anti" tariff order for my country's truck and bus tires. On October 20, the EU launched the first sunset review of anti-dumping on Chinese truck and bus tires. On July 28, the South African International Trade Administration Commission (ITAC) made a final anti-dumping ruling on my country's passenger car tires and truck and bus tires.

The trade friction cases that my country will face in 2023 also include: Mexico's anti-dumping investigation on my country's passenger car and light truck tires, the UK's transitional review of my country's truck and bus tires, the United States' annual review of my country's truck and bus tires, the United States' eighth administrative review of my country's passenger car and light truck tires, Thailand's second anti-dumping sunset review of my country's motorcycle inner tubes, and Turkey's anti-circumvention investigation of conveyor belt anti-dumping cases against China, India and Vietnam.

In the process of litigation of the above cases, my country's tire companies have been "trained" in actual combat, but they should also draw lessons. On the one hand, tire companies should regulate their operations and export order and try to avoid non-compliant and risky operations. Chinese companies have borne huge economic losses for non-compliant behaviors, and some have even paid the price of exiting the market. On the other hand, they should actively cooperate with the Ministry of Commerce and the China Rubber Association, learn and use legal weapons to deal with litigation, oppose unfair trade relief measures, safeguard their own interests, strive for the best results, and recover overseas markets. They should not be greedy for the temporary benefits of "riding a free ride".

The first and second annual administrative reviews of the U.S. Department of Commerce's anti-dumping investigation on Thai passenger car and light truck tires, and the U.S. Department of Commerce's anti-dumping investigation on Thai truck and bus tires, have also had an indirect impact on my country's overseas bases.

6. Take the road of technological self-reliance and highlight the innovation effect

In 2023, the rubber tire industry will break the boundaries of production, education, research, upstream and downstream, and strengthen and implement the road of technological self-reliance.

The development of liquid gold tires has become the fourth milestone technological innovation in the rubber tire industry. In 2023, multiple CCTV channels reported on liquid gold tires. Linglong Group has built the Zhonglu Huineng Intelligent Networked Test Field on the basis of the original Central Asian Tire Test Field. After completion, it will form a pattern of mutual support between traditional automobile testing and intelligent driving testing. On March 9, the "Key Technology Research and Application Demonstration of the Rubber Tire Industry Chain" project jointly completed by Qingdao University of Science and Technology, Sailun Group, and Soft Control Co., Ltd. won the 7th China Industrial Award. On May 15, the Tire Branch signed an agreement with Shanghai University, deeply integrating the industrial chain and the innovation chain, promoting the research and development of environmental waste gas treatment technology and industry application, and promoting the Sumitomo Rubber vulcanization waste gas collection and upgrading project. On July 20, the world's first bio-based degradable polyester rubber industrialization project initiated by Beijing University of Chemical Technology was signed to increase the application of green rubber materials in gloves, tires, shoes and other fields. On October 10, Sentury Tire signed an agreement with South China University of Technology and Qingdao University of Science and Technology to establish the "Green Low-carbon Sustainable Tire Material R&D and Application Joint Laboratory". On December 5, Sentury Tire cooperated with the Qingdao Institute of Energy of the Chinese Academy of Sciences to realize the commercialization of iron-based combed butyl rubber in the field of ultra-high performance UHP tires.

Innovation is the first driving force for development. Rubber industry enterprises strengthen the creation, protection and application of intellectual property rights, so that the results of intellectual labor can provide lasting power for enterprise development. Qingdao Doublestar, Sentury, Huasheng Rubber Group, Chaoyang Langma, Huaxing Wanda, Daye Co., Ltd., Kemai Chemical, Saixiang Technology and other 29 rubber tire companies have become national intellectual property "demonstration enterprises" or "advantageous enterprises" in 2023. Saixiang Technology's "A high-efficiency three-drum forming machine" won the 24th China Patent Award Excellence Award.

VII. Intelligent transformation and digital transformation run at "acceleration" to create a green and low-carbon supply chain

In order to achieve the "dual carbon" strategy, my country is accelerating the promotion of intelligent transformation and digital transformation, and accelerating the creation of a green and low-carbon supply chain. The rubber tire industry is showing a new trend of being more intelligent, greener and more integrated.

Intelligent transformation and digital transformation run at "acceleration", and are consolidating the foundation of a great country with the strength of the industry. Zhongce Rubber's "1+5+X Industrial Internet Platform" radiates product ID information genes to the entire industry chain including research, production, supply, sales, service and waste tire recycling, and has been named a key industrial Internet platform in Zhejiang Province. The second and 2.0 version of the future factory-the first tire of the green 5G digital factory project of Hangzhou Chaoyang Rubber Co., Ltd. rolled off the production line. Giti Tire took the opportunity of relocation to build a green and intelligent new factory. Yongsheng Rubber implemented an artificial intelligence semi-steel high-performance green and environmentally friendly radial tire equipment transformation and upgrading project based on Internet of Things technology. Shuangjian Co., Ltd. planned Taisheng Intelligent Company with the future factory model and built a 60 million square meters/year intelligent conveyor belt project. Sanlishi built an "intelligent rubber industrial park" and launched intelligent production lines for rubber V-belts and transmission belts. The intelligent workshop of Shandong Xingda Steel Cord Phase II Project with an investment of 3 billion yuan was put into operation. Nantong Huili implemented a digital project for intelligent manufacturing in the comprehensive utilization of waste rubber industry.

Fusion and innovation are becoming more and more active and prosperous, and scientific and technological technologies such as laser intelligent marking, laser removal of isolation agents, and laser workshop online mold cleaning research and development are gradually integrated into the tire industry.

The "dual carbon" strategy is a reshuffle of tire companies and the most important opportunity for the industry to achieve high-quality development. The "Air Quality Continuous Improvement Action Plan" is the third national-level blue sky protection action plan after the "Ten Air Measures" in 2013, and it has put forward further requirements for odor and odor environmental problems. The Ministry of Ecology and Environment has included industrial noise in the management of pollutant discharge permits in accordance with the law. The Energy Efficiency Benchmark and Reference Levels in Key Industrial Fields (2023 Edition) lists all-steel radial tires and semi-steel radial tires as new fields with large scale, high energy consumption intensity and large room for transformation and improvement, and promotes industry enterprises to implement transformation according to energy efficiency benchmark and reference levels. In principle, those with energy efficiency lower than the reference level should complete technical transformation or be phased out by the end of 2026.

The country vigorously carries out the tire energy efficiency "leader" activities, and Zhongce Rubber and Jinyu Tire are included in the list of national energy efficiency "leaders" for all-steel radial tires in 2022. Zhongce Rubber is included in the list of national energy efficiency "leaders" for semi-steel radial tires. 10 tire companies are shortlisted for the list of key product energy efficiency "leaders" in the petrochemical industry.

The China Rubber Association has vigorously carried out basic statistical work on the average unit product energy consumption, including the "Unit Product Energy Consumption Limit for Tires and Carbon Black" has submitted a draft of the mandatory national standard for approval, and the unit product energy consumption limits of various industries such as conveyor belts, steel cords, bead wires, bicycle tires, and latex have been released or upgraded to group standards. The group standard "Carbon Emission Accounting Methods for Vulcanized Rubber Powder and Recycled Rubber Production" is under review.

In 2023, the intelligent transformation and green low-carbon transformation of the rubber tire industry have been recognized by the state. Many companies have become demonstrations and models of transformation and development, and many technologies have been encouraged and recommended. Four rubber industrial enterprises, including Zhongce, Guilun, Wanxiang Xinyuan (Ningxia), and Longxing Chemical, have entered the "2023 5G Factory List" of the Ministry of Industry and Information Technology. Three technologies, namely, intelligent waste tire recycling technology and equipment, continuous green preparation of liquid recycled rubber production line, and multi-stage screw continuous desulfurization preparation of recycled rubber production line, are included in the "National Encouraged Development of Major Environmental Protection Technology and Equipment Catalog (2023 Edition)". In the 2022 Green Manufacturing List and the 2023 Green Manufacturing (Public Notice) List announced by the Ministry of Industry and Information Technology, there are 35 green factories and 7 green supply chain management companies in the rubber tire industry. Including Sailun, Triangle, Jinyu, Doublestar Dongfeng, Zhengdao Tire, Double Coin (Xinjiang) Kunlun, Sanli Tire, Guangxi Linglong, Dezhou Linglong, Prin Chengshan, Bridgestone (Wuxi), Zhejiang Shuangjian, Jiangsu Xingda, Bekaert, Longxing Chemical, Cabot (Xingtai), etc.

VIII. "Strict" barriers seriously affect export trade

In order to occupy a dominant position in international economic relations for a long time, developed countries not only transfer their carbon emissions to developing countries, but also set up barriers from multiple dimensions such as technology, trade and "green". With the accelerated evolution of the century-old changes and the difficult recovery of the world economy, these barriers have emerged in new forms, which will seriously affect the import and export trade of developing countries headed by my country, and become an important hurdle that countries need to break through in the development of international trade.

The EU Carbon Border Adjustment Mechanism (CBAM), adopted on March 15, 2023, is the world's first proposal to address climate change in the form of carbon tariffs; on June 30, the EU Zero Deforestation Regulation (EUDR), an important market for my country's tire exports, officially came into effect; on July 28, the EU's New Battery Act became a barrier to the export of new energy vehicles to the EU; on October 1, the state of California in the United States required tire manufacturers to find potential alternatives to the rubber antioxidant 6PPD by the end of March 2024, otherwise they would stop selling tires containing 6PPD in California; on December 18, the EU Council and the European Parliament reached an agreement that the "European Stage VII Emission Standard (Euro 7)" introduced for the first time the emission limit of ultrafine particles generated by tire wear. These measures will affect my country's tire exports to a certain extent in the future.

9. The rise of domestic products, and the leap of independent brands to the middle and high end of the value chain

Benefiting from inflation in Europe and the United States, the rise of new energy vehicles in my country, and the drive of new consumption concepts and methods, the cost-effectiveness of domestic tire products has become more prominent, and the gap between brand premium and international giants is getting smaller and smaller. More and more consumers are willing to try domestic brands, which has improved the global popularity and reputation of domestic brands. From passenger cars to commercial vehicles, from traditional fuel vehicles to new energy vehicles, my country's tire products have gradually become the preferred supporting partner of major global auto brands.

"National tide" as an external manifestation of cultural confidence is stimulating consumer vitality, high-quality passenger tire products have emerged, and off-road tires are even more unique. CCTV launched the "Chinese Brands Worth Recommending to Asia" campaign, and Sailun Liquid Gold Tire was introduced to the whole of Asia as one of the excellent Chinese brands. Sailun Group will continue to be the exclusive tire supplier for the "CJ SUPERRACE GT CLASS" racing event in South Korea in 2024. As the global official tire partner of Arsenal Football Club, West Lake Tire (WEST LAKE) appeared at the Emirates Stadium, Arsenal's home stadium, and the sideline advertisements rolled to show Zhongce Group's flagship brand in Europe.

Since the launch of the winter tire high-speed rail brand special train, in 2023, the Triangle Tire high-speed rail brand Hangzhou Asian Games special train will be launched, and Triangle Tire will also title the Weihai Super Triathlon. Four tire companies, Huasheng, Fangxing, Yongsheng, and Jinyu, jointly titled the first high-speed rail train in the name of "Guangrao Rubber Tire Characteristic Industry Cluster". Wanda Baotong Tire titled the Dongying Marathon.

The leap in brand value also comes from the transformation of the industry's own values. The industry resists low-price competition, advocates positive and active sales concepts, promotes and builds brand image, and standardizes market operations and channel construction. The industry has achieved a reasonable return of profits and is on the road to healthy and sustainable development.

10. Active mergers and reorganizations of leading enterprises

On January 6, 2023, Wangneng Environmental Co., Ltd. completed the acquisition of Nantong Huili Rubber's equity and held a 90% stake. On February 10, Zhonghong Pulin Medical signed a contract to acquire 70% of Guilin Hengbao's equity for 541 million yuan, thus completing the high-end layout in the field of latex surgical gloves in addition to the leading products of PVC gloves and nitrile gloves. On April 13, Guangzhou Shuangyi Latex, a subsidiary of Guangzhou Gongkong, and Anyu Latex formally signed an equity transfer agreement, holding 70% of the shares, making up for the shortcomings of the acquirer in terms of medical latex gloves qualifications. In June, Hainan Rubber completed the acquisition of Hesheng Agriculture, holding 68.10%. In July, Sinochem Green Fund made a strategic investment in Zhongwei Chemical Fiber, enriching the supplier resources of nylon 66 cord fabric, a key raw material for Sinochem Group's rubber tire segment. On July 29, Black Cat Co., Ltd.'s holding subsidiary acquired 100% of the shares of Luliang Black Cat New Materials for 150 million yuan, and has the production capacity of special carbon black by the mixed gas method. In July, the Zhongce Rubber (Tianjin) Agricultural Radial Tire and Bias Engineering Tire Workshop Expansion Project was completed. This is the first project built after the mixed reform.