Frbiz Reports Tire Industry in Dilemma

Jun 30, 2010, 10:00 ET from

BEIJING, June 30 /PRNewswire-Asia/ --, one of China's leading B2B search platforms, reports that the tire industry is in a dilemma.

Recently, Frbiz learned that the average price of natural rubber imports is down, and car manufacturers have high inventories this year, the Chinese tire companies into the upstream raw material prices rising and downstream demand is slack, creating quite a dilemma.

Statistics show that at ports in Shandong this year, the monthly average prices of imported natural rubber continued last year's upward trend, in April breaking 3,000 U.S. dollars/ton, and reaching a new high in May at 3,138 U.S. dollars/tons, a growth of 1%. At the same time, imports of natural rubber fluctuate significantly from month to month; in March natural rubber imports reached their highest peak since 2009 of 100,000 tons, and quickly dropped after that. Natural rubber imports were at 75,000 tons in April, May imports at 41,000 tons. Overall, during the first 5 months of 2010, the imports of natural rubber in Shandong ports were 371,000 tons, which was up 8.6% over last year and are worth 1.09 billion U.S. dollars, an increase of 1.3 times.

According to Frbiz analysts, the average price of imports of natural rubber in Shandong ports continues to rise, but offers explanations for the recent fall. First, southeast Asia and the Brazil Amazon River area, the two major global latex-producing regions, and China's major production area in Yunnan Province both continue to experience dry weather. resulting in higher overall international market prices for rubber. Second, with the rising prices of natural rubber, tire enterprises' cost pressure has increased, and demand is weaker, further restraining imports.

It is worthy to note that the car sale situation will reduce the pressure on the tire industry, so that when the downstream demand slackens and upstream raw material prices rise, these will both created a hard dilemma; consumer demand for natural rubber has been reduced, and further price hikes won't help.

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