The soaring cost causes loss-making tire companies to raise prices

With the release of annual reports and performance forecasts, tire listed companies are mostly losing money. Insiders pointed out that the soaring price of natural rubber is the main reason, and called for the country to actively put the State Reserve rubber, suppress the price of rubber; phased cancellation of natural rubber, synthetic rubber import tariffs; according to the refined oil pricing mechanism to determine the market price of synthetic rubber.

Production is a loss. The tire industry in 2010 was mixed. On the one hand, the global economy is picking up, auto sales are growing, the tire industry is booming in both production and sales, and market demand is growing significantly. On the other hand, the tire industry is facing the challenges of high raw material prices, exchange rate fluctuations, global trade protection, and increased competition in the domestic market.

Since June of last year, the main contract for natural rubber in the Shanghai Futures Exchange began to rise unilaterally from RMB 20,000 to 30,000 in October last year. It broke the RMB 40,000 mark in mid-January this year and rose to 43500 at the highest level. Yuan, which is currently falling slightly.

The consequence of skyrocketing prices is that tire manufacturers have suffered serious losses. Due to the overheated investment in the tire industry, fierce market competition and limited price increase of products, the profitability of products has dropped drastically, and the more tire manufacturers produce more losses.

From the disclosed annual report, except for the double-money shares (600,623), the tire company's performance has suffered a significant loss. On February 17, the annual report disclosed by S.G.T. (600182) showed that during the reporting period, the company’s operating income increased by 36% year-on-year, but its operating profit decreased by 63% year-on-year, and its net profit decreased by 64% year-on-year. The company's annual report pointed out that the tire industry is highly competitive. Although the company's products have increased prices, they still cannot overcome the impact of raw material price increases and exchange rate fluctuations.

Tire listed companies that use natural rubber as their raw materials, although they have not yet disclosed annual reports, have already released performance forecasts that show that due to the substantial increase in the price of natural rubber for natural materials, companies are facing more embarrassing situations with more production and more serious losses. Fengshen Co., Ltd. (600469) expects its net profit in 2010 to decrease by approximately 50% year-on-year; Tire Tyre (000589) expects 2011 net profit to decline by 50% to 70%.

Reduce production and increase prices to cope with the sharp rise in raw material prices, resulting in losses to enterprises. Since the fourth quarter of last year, due to the high prices of natural rubber and other raw materials, production costs have skyrocketed and tire companies have planned to adjust tire production.

According to statistics from the China Rubber Association, the growth rate of output of 45 companies in October 2010 was 2.5% lower than that in September. In November, it was 3.1% lower than in October and December was 2.2% lower than in November. At the same time, the comparison of the production of the seven companies in January this year showed that the output in January 2011 decreased by 4.84% compared with December of last year. It is estimated that in February, due to the Spring Festival holiday and other factors, the output will decline even more.

Since entering 2011, global multinational tire companies and domestic tire companies have basically formulated tire price increase programs, which are mostly in the range of 5%-10%, and global multinational tire companies have established tire companies in China. Since the beginning of 2011, foreign companies such as Michelin, Bridgestone, and Sumitomo have again announced a price increase of 5%-8% in China's tire matching and replacement market; domestic-invested companies such as Shuangqian, Delta and South China have once again raised prices of domestic tires. 5 %-8%, export tire prices have also been raised by about 6%.

COFCO Futures Analyst Feng Hua pointed out that the plastics companies should objectively analyze the market and use spot and futures to prevent the raw material prices from continuing to rise substantially, and take effective measures to save themselves.

The establishment of the State Reserve Plastics market pointed out that the main rubber-producing countries this year, the weather began to improve, which is conducive to natural rubber tapping and growth, but also to create favorable conditions for the increase of natural rubber production, but the price of natural rubber will adjust the shock center, also Need to pay attention. At the same time, due to many uncertainties such as artificial speculation, natural rubber prices are likely to remain high in the market.

Industry insiders have appealed that the government can clearly suppress the price of rubber through the use of the State Reserve's rubber and issue a signal stabilizing the market through the launch of the natural rubber national reserve. At the same time, they said that when natural rubber prices have reached historical highs, they can phase out the import tariffs for natural rubber and synthetic rubber, which will not affect the development of the domestic natural rubber industry, but will help rubber processing companies reduce costs. Increase competitiveness.

The Tire Industry Association of Shandong Province believes that the market price of synthetic rubber can be determined by comparing with the refined oil pricing mechanism. This can effectively limit the synthetic rubber production enterprises' discretionary adjustment of product prices and ensure that the company obtains reasonable profits.

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