The 18th China International
TIRE EXPO 2022
12-14 December 2022
Shanghai China
Media and Publication > Media Centre

Is a "Black"​ storm coming?

Because Malaysia trimmed its production estimate by 30,000 tonnes, the Association of Natural Rubber Producing Countries (ANRPC) trimmed down the production of natural rubber to 13.782 million tonnes for 2021 in its July estimate, where the anticipated world demand is 13,900 million tonnes. However, even with this "good" news, the price of natural rubber is still weak. And from the yearly chart of rubber price in China, you can see the trend already show a "lower-low" pattern and signal there is more downsize to the price of rubber. the rubber and other commodity prices in other markets show a similar pattern.

China is the first one to get out of the pandemic recession because it can apply very strict social controls to combat the virus. So its economy rebounded the earliest. However, from China's PMI, you can see the rebound topped out in January this year and is going down from there.

Data from the tire industry support the trend. Since May, Chinese tire companies have been operating at a relatively low level. As of August 12, the operating rate of semi-steel tire manufacturers was 61.09% and the rate of all-steel tire manufacturers was 65.88%. Also, commercial vehicle sales are facing great pressure, and sales continue to decline after the peak in March 2021. The latest data shows that in July, the production and sales of commercial vehicles were 315,000 and 312,000, respectively, down 33.2% and 30.2% year-on-year.

Although the American stock market is setting new highs every day. We can also see America's PMI is topped out in March and going down from there. With the expiration of stimulus, over expenditures on durable goods during the pandemic at home. We expected the US economy will slow down in the second half of the year. It follows a similar pattern as China. And in this case, by observation, China's business cycle is 3-6 months ahead of the US.

Europe's PMI is still at a high level. However, we think Europe's business cycle is a few months further behind the US's business cycle. So it will follow the US's trend and starts going downward in the second half, or may around the end, of the year after it finished the inventory rebuilding cycle.

Another very important factor that will affect the second half of the year would be the strength of the US dollar. It affects commodity prices and emerging economics enormously. As we see from the chart, the US dollar already formed a W bottom in technical analysis terms. Will it turn stronger in the second half of the year?

At this moment we still seeing tire price increases outside of China, not within China anymore. As a smart importer/distributor, if you are low in inventory, you definitely should place orders to keep your inventory level. However, if you are stocked up and still even plan to build more inventory by expecting another price increase to make more profits, it may not be wise.

We have launched a website to help importers to connect with credible tire and wheel manufacturers: http://direct.citexpo.com.cn/. If you have any questions or comments, please chat with us on Facebook, LinkedIn or email us.

CITEXPO Direct link: http://www.citexpo.com.cn/en/citexpo_direct.php

 

For further information, please visit the official website at http://www.citexpo.com.cn or email: citexpo@reliable.org.cn / Tel.:+86(0)10-8589-8181

Reliable International Exhibition Services Co., Ltd. &
Topic International Exhibition Services Co., Ltd. All rights reserved.
京公网安备 11010502042914号,京ICP备19031008号-3