China truck tire overcapacity 'immense'

NIAGARA FALLS, Ontario (June 18, 2013) — Three things are noteworthy about China's truck tire industry, according to Boudewijn De Loose, global marketing manager of Bekaert Corp.: production overcapacity, a virtually non-existent retreading sector and a continuing measurable demand for bias-ply tires.

These facts are interrelated, Mr. De Loose told delegates attending the recent Rubber Association of Canada's 2013 Tire & Rubber Summit in Niagara Falls.

Similar to its passenger tire business, Mr. De Loose said, China is a major player in truck tire markets throughout the world, holding double-digit market shares nearly everywhere.

He pegs China's share of the North American market at 24 percent, in Europe and Russia 23 percent, Latin America 27 percent and Africa 72 percent.

"What you're seeing here is that China has a very significant market share in all regions of the world," he said.

Truck tire production in China hit 88 million units in 2012, he said, but production capacity is 120 million tires. "Overcapacity is going to stay."

One reason for the huge capacity for new truck tires is that retreading is absent in China, the Bekaert executive said.

"China has no retreading. If it had retreading like in the U.S., it would not need 60 million tires," but about half that number, he said.

Mr. De Loose said he expects truck tire retreading to come to China eventually, but the nation "absolutely is not ready for retreading, not anytime soon."

In China, fleets and the concept of cost-per-mile don't exist yet, he said, and most vehicles are owner-operated. Trucks are often overloaded, and tires are used until they are worn out and not suitable for retreading.

The executive also said the process of truck tire radialization in China is nearly finished. Unlike in Europe and the U.S., where nearly all tires in use are radials, in China radialization will plateau at a lower level because a significant portion of the nation still has poor roads.

"Our thinking is that bias isn't dead," Mr. De Loose said, "and radialization will be about 70, maybe 75 percent, but not 90 percent anytime soon."

In contrast, truck tire radialization in India probably will flatten at about 50 percent, because "India is a huge country and has more bad roads," he said. "Indian bias tires are very good and not disappearing anytime soon."

Kortrijk, Belgium-based Bekaert is the world's No. 1 independent steel cord maker, holding a self-proclaimed 25-percent share of the world market. Sales in 2012 were $4.28 billion.

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Ed Noga is editor of Rubber & Plastics News, an Akron-based sister publication of Tire Business that ran this report.