Is there a problem of overcapacity in the tire rubber market?

There is indeed a problem of overcapacity in the tire rubber market, and the following is a detailed analysis of this issue:

1、 The current situation of overcapacity

New projects launched and export market: In recent years, there have been continuous new projects launched in the tire industry, leading to a sustained increase in production capacity. However, most of these newly added production capacities are to cope with the growing export market, which is not unlimited, thus there is a risk of overcapacity.

Market demand changes: Although the rapid growth of the new energy vehicle market has brought new opportunities to the tire industry, the decline of the traditional fuel vehicle market has also had a certain impact on tire demand. At the same time, the cyclical recession of the global economy and the intensification of trade protectionism have also put pressure on tire exports, further exacerbating the problem of overcapacity.

2、 Reasons for overcapacity

Disorderly expansion and homogeneous competition: In the past period, the tire industry has gone through a stage of disorderly expansion, resulting in a large number of homogeneous products appearing in the market. These products are almost identical in terms of performance, quality, price, etc., which makes market competition extremely fierce and price wars frequent, ultimately leading to overcapacity.

Rising raw material costs: The main raw materials for tires are natural resources such as rubber, and their prices are influenced by various factors such as weather and geopolitics. In recent years, the continuous rise in raw material costs has brought enormous cost pressure to tire companies. In order to reduce costs, some companies have chosen to expand production capacity to share fixed costs, thereby exacerbating the problem of overcapacity.

3、 The impact of overcapacity

Price war and after-sales issues: Overcapacity has led to fierce market competition, and price war has become the main means for enterprises to compete for market share. However, price wars not only damage the profit margins of enterprises, but also lead to a decline in after-sales service quality, affecting the brand image of enterprises and consumer satisfaction.

Resource waste and environmental pollution: Overcapacity means that a large amount of production equipment and raw materials are not fully utilized, resulting in resource waste. Meanwhile, the waste and wastewater generated during tire production also put pressure on the environment.

4、 Measures to address overcapacity

Strengthen technological innovation and industrial upgrading: By developing new technologies, materials, and processes, improve the performance and quality of tires, and meet consumers' demand for high-quality tires. At the same time, we will strengthen industrial upgrading and promote the development of the tire industry towards intelligence and green direction.

Expand new application areas: Actively seek new application areas and market opportunities, such as new energy vehicles, aerospace, high-speed railways, etc. These fields have higher requirements for tire performance and quality, which can provide more market opportunities for tire companies.

Strengthen international cooperation and exchange: Actively participate in the exchange and cooperation of the international tire industry, understand the dynamics and trends of the international market, and learn advanced production technology and management experience. At the same time, strengthen cooperation with international tire companies, jointly develop new products and technologies, and enhance international competitiveness.

In summary, there is indeed a problem of overcapacity in the tire rubber market, but measures such as strengthening technological innovation and industrial upgrading, expanding new application areas, and strengthening international cooperation and exchanges can effectively address this issue and promote the sustained and healthy development of the tire industry.