Tire industry welcomes expansion again: Billions of capital injected into the market

01 Hunan 9.8 billion tire project
Recently, media reports showed that Yongzhou City's fourth major project concentrated opening and completion and signing event and the groundbreaking ceremony of Yongzhou Economic Development Zone High-end Tire Flexible Intelligent Manufacturing Green Technology Industrial Base Project were held. The high-end tire flexible intelligent manufacturing green technology industrial park project started this time plans to invest 9.8 billion yuan and will build an annual production base of 21.75 million sets of high-end tires.

As early as September 11 this year, the media reported that the signing ceremony of the high-end tire flexible intelligent manufacturing green technology industrial park project between Yongzhou Economic Development Zone and Shanghai Huaqing Petroleum Development Group Co., Ltd. was held. The signed project plans to invest 9.8 billion yuan to build an annual production base of 21.75 million sets of high-end tires, of which the first phase will invest about 4.5 billion yuan, with a land area of ​​about 300 acres and an annual output of 7.25 million sets of high-end tires.

Shanghai Huaqing Petroleum Development Group Co., Ltd. is a global diversified industrial investment company dominated by high-tech industries.

It is understood that the key equipment of the project has applied all the technical routes of independent intellectual property rights, and achieved five major breakthroughs in flexible modular production process, all-electric nitrogen vulcanization process, skeleton material jointless winding process, key component jointless winding process, and dynamic simulation design, breaking the international high-end technology blockade and filling the domestic gap.

02 Fengshen raised 300 million to expand OTR
On December 20, 2024, the resolution of the fourth meeting of the ninth chairman of Fengshen Tire Co., Ltd. was announced. The company reviewed and approved the "Proposal on the Company's Proposal to Issue A-share Stocks to Specific Objects in Simple Procedures (Revised Draft)", and the total amount of funds planned to be raised will not exceed 300 million yuan, which will be mainly used for the "High-performance Giant Engineering Radial Tire Capacity Expansion and Efficiency Improvement Project", with a total investment of 1.46 billion yuan.

The announcement shows that after the project is completed and fully put into production, it will achieve an annual increase of about 20,000 giant engineering radial tires. The annual production capacity is expected to reach 100% full load production in the fourth year after it is put into production. After the project reaches full production and enters a stable operation period, the annual revenue is expected to be about 1.563 billion yuan, and the internal rate of return (after tax) of the project is expected to exceed 22%. Fengshen shares said that with the continuous growth of market demand for giant radial tires, the acceleration of domestic substitution and the release of the company's production capacity, the company's giant radial tire market sales scale will continue to expand, and the company's future product capacity digestion has effective guarantees.

03 Chinese tire companies continue to accelerate production expansion
There is no doubt that China is a major country in global tire production capacity, and China's tire production capacity growth is far from reaching its peak. According to incomplete statistics, at least 35 billion yuan of investment will flow into the tire market in the first half of 2024.

A large number of tire investments have poured into the market, but in China, the tire industry has long evolved from a profitable blue ocean to a fiercely competitive red ocean. Even so, there are still batches of companies that continue to pour into the tire industry for large investments, but it is because other industries are not as good as the tire industry.

Although China's tire companies have eliminated batches of production capacity against the background of the country's elimination of backward production capacity, there is still capital entering the tire industry, indicating that there is still hope for the global tire business. Even though many problems have been exposed, such as the obvious oversupply in China's tire market, the withdrawal of foreign TBR, and the inward-looking prices of Chinese tire products, Chinese tire companies are still moving forward rapidly. The large number of investments entering the tire market also intuitively reflects that this market is not too bad!