Raw material decline tire industry level of gross profit can be improved

Affected by high inventory levels and pressure from traders, on January 13, 2014, Hujiao's main contract fell by 3% to a new low of nearly four years. While rubber products benefited from falling raw material prices, gross margins continued to improve. The market expects that the natural rubber planting area in Thailand, Indonesia and other countries will increase significantly and will enter the harvesting period one after another. Natural rubber supply will remain abundant, and the prosperity of rubber products is expected to continue.

The chemical industry has been affected by capacity expansion in recent years, and it has entered an overall decline in earnings. According to the Shenwan industry classification, of the 239 listed chemical companies, 128 have already disclosed 2013 performance forecasts, of which 78 are preliminaries, accounting for 61%. On the whole, due to the deceleration of the macro economy and dragging capacity expansion in recent years, the profitability of the chemical industry has been declining. Some profitable companies, which are partially subdued due to the compression of supply and demand, have achieved better profitability, mainly focusing on rubber products and dyes. Representative chemical products, chemical fibers represented by spandex , and glyphosate and paraquat are typical pesticides.

Looking at the overall production capacity and demand, it is still a long time for the decarbonization of chemical products, but some of the subdivided varieties suffer from the compression of production capacity, leading to an improvement in supply and demand, or the decline in raw materials, which leads to an increase in the gross profit margin of products. This has become an important factor in improving the economy. Among them, the promotion of gross profit margins for rubber products, driven by the continuous decline in raw materials, is expected to increase.

The data show that Thailand, the world's largest natural rubber planting country, had a new planting area of ​​32.9 thousand hectares in 2003. By 2008, this figure has been magnified by nearly ten times. The annual new planting area has reached 221.2 thousand hectares. The natural rubber planting cycle is generally 5 to 8 years, and the harvesting period after the gum trees mature can be as long as 30 years. As new supply continues to increase, rubber prices have continued to fall since 2011, and the domestic market has fallen by an average of over 60%.

In addition, the production capacity of synthetic rubber also increased rapidly. The industry plan issued by the China Rubber Industry Association stated that the domestic demand for synthetic rubber is expected to reach 4.695 million tons in 2015, while the production capacity will reach 6.4 million tons, the overcapacity will be significant, and the price of synthetic rubber Will continue to be weak.

In the case of significant excess production capacity of natural rubber and synthetic rubber , profits are concentrated in the middle and lower reaches of the industrial chain of rubber products and tires. At the same time, the relative rigidity of end-use demand has led to a continuous increase in the gross margin of products in the middle and lower reaches of the industrial chain. The company also achieved substantial growth in performance.

At present, there are a number of listed companies in the industry engaged in the production of rubber conveyor belts and transmission belts. According to information from related companies, rubber usually accounts for 30% of the cost of rubber conveyor belts. Because raw material prices have fallen sharply, and the price of conveyor belts is relatively stable, it is expected that the gross profit margin level will rise significantly. In addition, some companies engaged in the production of high-end agricultural machinery belts have successfully developed a number of imported alternatives. With the background of accelerating the construction of a new type of agricultural management system in China, the large-scale application of agricultural machinery is expected to start, which is obviously beneficial to related companies.

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