SEOUL, South Korea—It was China's Wen Ying Xu's first visit to South Korea, and first attendance at a meeting of the International Institute of Synthetic Rubber Producers.
So what did the deputy secretary general of the China Rubber Industry Association hear about for several days? “I think the most popular word here is 'China,' ” said Xu, whose association's 1,300 member companies account for more than 80 percent of that nation's rubber industry output.
Virtually every speech—as well as many private conversations—at the meeting of the world's SR producers touched on China's place in and impact on the world's rubber industry. Xu contributed to that discussion directly with a presentation about China's tire industry, while Fang Ren, deputy director of the China Specialty Rubber Information Center, gave a talk about the country's synthetic rubber market.
The information, data and forecasts given by the pair shared a common truth: In the rubber industry, China is huge and getting bigger.
Xu, who uses the Western name Mary, said the industrial output of China's rubber industry has grown 178 percent since 2005 and reached $94 billion in value last year. China's rubber industry showed 28.8 percent growth in 2010 from 2009.
Other statistics Xu related:
— China has 19 of the world's 75 largest tire makers, with Hangzhou Zhongce Rubber Co. Ltd. ranking as No. 13;
— Tire makers in China turned out 420 million units last year, including 350 million radial tires, up 10.5 percent from 2009;
— The nation's tire companies exported $405 million worth of passenger and $505 million in truck tires in 2010. China exported tires weighing a total of 3.17 million metric tons, while importing 85,084 tons.
All the news about the tire market in China wasn't positive last year, however. Xu said soaring raw material costs, especially for natural rubber, meant while output was high, more than half of China's tire manufacturers operated at a loss in 2010.
Answering a question about the impact of stiff tariffs the U.S. placed on Chinese passenger tires, as well as a separate action concerning off-road tires, Xu said that's the reason China has been targeting Europe as a destination for exports.
One of the biggest stories about China's tire industry in 2010, Xu said, was a new “tire industry policy” ordered by the nation's Ministry of Industry and Information Technology. The policy requires that any expansions at existing heavy truck tire plants result in a capacity level of at least 1.2 million units a year, while at light truck and passenger tire factories, capacity must hit at least 6 million pieces annually.
Among other rules, no new tire projects are permitted for the rest of 2011.
The future of tire production in China is glowing. Xu said the CRIA predicts a 7.9-percent increase in tire production this year, to 453 million units, including 390 million radial tires, as the country works to satisfy growing domestic demand and increase its exports.
For example, the CRIA expects demand for passenger tires will hit 145.4 million units in China this year, but soar to 163.2 next year and 223.7 by 2015. Heavy truck tire demand, reaching 63.4 million units in China this year, will rise to 67.8 million in 2012 and reach 83.1 million in 2015, Xu said.
Rubber supplies
All that tire production, as well as non-tire rubber goods, requires large volumes of rubber, and China's synthetic rubber industry has responded with major capacity increases.
Ren reported that China's SR capacity hit 2.71 million tons last year, a 6-percent increase from 2009, led by rubber producers Sinopec Corp. and PetroChina Co. Ltd. China consumed 3.32 million tons of SR in 2010, and a number of plant capacity projects are under way in the country.
“In 2015, the capacity of synthetic rubber in China is expected to approach to 4.37 million tons per year, up 63.8 percent compared to that of 2010,” said Ren, whose institute is part of the China National Chemical Information Center.
China imported 1.32 million tons of SR in 2010, about the same as in 2009, and exported 179,000 tons, Ren said. South Korea is its largest source of imported SR, with 20.6 percent of the total. The U.S. is second, slightly ahead of Japan, Taiwan and Russia.
Those U.S. exports to China have been increasing, Ren said, with most being higher-value-added products, like EPDM and butyl rubbers.
China's GDP is forecast to grow at an annual rate of 8.5 percent to 2020. Ren said the increase in urbanization in China will require investment in infrastructure facilities, such as roads, airports, bridges and railways, all of which will drive up SR demand.
Besides the anticipated rise in consumption of SR for tires, Ren said auto production will significantly increase demand for EPDM, butyl, nitrile and chloroprene rubbers. The rubber hose and belt industry, too, will show huge growth, according to the CSRIC figures: an annual rate of 12 percent through 2015, while SR going into footwear will hit 350,000 tons by that year.