Chinese tire makers are feeling deflated

According to the China Rubber Industry Association, in the first half of this year, China's tire industry experienced an unexpected slowdown as exports fell due to the slumping global economy and rising costs of raw materials.

In the first six months, the tire output by the association's members was about 124 million units, an increase of 12 percent from the previous year, reports Reuters, citing an unnamed senior official of the association.

China is the world's biggest natural rubber consumer. However, it is also a country without natural rubber resources. In 2006, the natural rubber imports accounted for 70 percent of the nation's total consumption. Last year, the percentage grew to 75 percent.

Statistics from Chinese Customs show that in the first half of the year, 160 million units of tires were exported from China, valued at $3.94 billion, rising 4.6 percent and 22.1 percent respectively from the same period last year.

However, the growth of the export volumes and revenue fell 17.6 percent and 18.6 percent respectively.

"In the second half, some manufacturing facilities in China may see closedowns," says an official of Doublestar Group Co Ltd in Shandong province, one of the top ten Chinese tire makers. "The export volume of our Doublestar tires dropped by 30 percent in the first six months. "

"The costs of raw materials are growing too fast, breaking the balance between the cost and pricing. The depressed profit margin makes us unprofitable in the global market," he adds. "As a result, we can only export top-grade and high-value all-steel radial-ply tires."

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