QINGDAO, China—China's major rubber sector players saw an 11 percent drop in revenue and a 17 percent drop in profit last year, compared to 1.5 percent and 0.1 percent growth in 2014, Deng Yali, chairman of China Rubber Industry Association, said during her speech at the 2016 China Rubber Conference in Qingdao.
For the major companies surveyed by the association, tire makers took a particularly strong hit with a 14 percent drop in revenue, a 23 percent drop in profit and a 16 percent drop in export delivery value. Five tire makers were closed last year, shutting down 9.6 million per year radial tire capacity, with 81 percent of total capacity shut down over the past five years.
The National Bureau of Statistics' data showed slightly more optimism: The rubber sector overall had $156 billion in sales in 2015, up by 3 percent compared with 2014. Profit fell by 2 percent to $95 million.
During china's 12th five-year plan (2011-15), its rubber sector had a 9.6 percent annual growth rate for revenue, a sharp drop from a 36 percent annual growth rate during the 11th five-year plan.
“Developed markets such as Japan and Korea have also had similar slowdown,” said Liu Peilin, deputy minister of the development strategy and regional economy department under the state council's development research center, “China's ‘New Normal' is a symbol of the country's high industrialization level. We are not looking at an economic crash.”
Yali added that the sector has been optimizing its structure, with more environmentally friendly technology, increased proportion of high value-added products and improved product quality and variety. Last year green rubber additives took up 92 percent of the total production, and 91 percent of country's tire production was radial tires.
Deng expects China's rubber sector to have a 7 percent sales growth in 2016 and an annual growth rate of 7 percent during the 13th five-year plan until 2020. “Now it's a critical moment for us on our way to climb over the mountain,” she said.