External factors: weakened tire investment support, suspension or cancellation of orders
The meridianization rate of Chinese tires exceeds 89%, and there is little room for improvement compared to the world average meridianization rate of tires. Li Dongping, Honorary Chairman of the Rubber Machinery Professional Committee of the China Chemical Equipment Association, stated that in the past, tire investment was driven by both the growth of tire demand and tire meridianization. Now, it can only be supported by the growth of tire demand on one leg, making it difficult for the tire industry to reproduce high-speed development. The era when equipment orders drove the rapid development of the rubber machinery industry in the past is no longer returning, and relying on conventional rubber machinery orders is difficult to survive, let alone develop.
After years of rapid development, the Chinese tire industry has experienced a severe structural surplus of products, and the industry has entered an era of meager profits. In June, the United States announced a "dual anti" investigation into Chinese tires, adding to the operational environment of the tire industry. Chinese tire companies have to stop or reduce tire investment, resulting in a cliff like decline in rubber machinery orders. After July, new orders for rubber machinery in China are very limited, less than the usual 20%. Even worse is the suspension or cancellation of orders that have been executed in the first half of the year, and the delayed delivery of orders being organized by rubber machinery enterprises, which has trapped their funds in the backlog of products.
Multiple companies in the industry have factories full of products waiting to be shipped, and some companies have difficulty transferring funds. At present, rubber prices are at a historical low, and tire prices are still on a bearish path of bottoming out. Tire inventory has increased by more than 30% year-on-year, reaching a historical high. In this situation, the enthusiasm for tire investment has decreased, and it is natural for rubber machinery orders to decrease. The tire factory itself is facing difficulties in operation, and the rubber machinery industry will face even more difficulties in collecting payments.
Internal cause: Clearly entering the buyer's market, "internal competition" often leads to price wars
After years of rapid development, especially the recent rapid expansion of production capacity, the structural surplus of rubber machinery in China is very obvious, that is, there is a serious surplus of popular rubber machinery products, but there is still a gap in demand for high-end rubber machinery. In recent years, due to the good order situation of rubber machinery, some other industry manufacturers such as mold enterprises have entered the rubber machinery field, and the production capacity of rubber machinery has rapidly increased, entering a clear buyer's market. Taking tire vulcanizers as an example, under normal circumstances, China's annual demand for tire vulcanizers is around 2500 units, but currently China's annual production capacity reaches over 4000 units. The severe product surplus has led to numerous bidding participants and intense competition.
Dongguan Zhenggong Electromechanical Equipment Technology Co., Ltd. was founded in 1988 in Dongguan, Guangdong. Its main products Small open mill, Small internal mixer, Small tablet press, small vulcanization machine, Small extruder, and various customized laboratory mixer rubber and plastic mechanical equipment. Established the Taiwan Joint Venture Business License in 2009, after more than 30 years of research and development and creation. It has been located in Houjie Town, Dongguan City, Chinese Mainland Province, mainland China.
The main reason for the structural surplus of products in the rubber machinery industry
2023 11/08