Chinese Tire Imports into US Plunge in October

R&P News (subscription required) is reporting that Chinese passenger tire imports into the U.S. fell by more than 50 percent in October from September following the Sept. 26 imposition of higher duties, according to recently released trade data. The U.S. raised duties on Chinese consumer tires to 39 percent from 4 percent Sept. 26 in response to a trade action brought earlier in the year by the United Steelworkers union. The additional duties fall to 30 and 25 percent in the second and third years of the period under scrutiny.

For comparison purposes, I have provided the year-to-date figures from the US ITC below.

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Chinese Tire Imports into the United States by Month, 2009

Codes: 40111010 and 40112010

Passenger Tires
000 units
	Jan	Feb	Mar	April	May	June
Total	6546	6182	7808	8005	8159	8776
% China	41.8%	34.1%	40.5%	44.1%	43.4%	37.9%
China	2735	2107	3160	3527	3540	3323
Truck Tires
000 units
Total	1694	1519	1879	1763	1841	1853
% China	38.8%	22.6%	30.1%	32.2%	36.2%	37.3%
China	657	344	566	568	666	692

Passenger Tires
000 units
	July	Aug	Sept	Oct
Total	9544	9649	9671	7181
% China	43.0%	46.6%	45.1%	22.1%
China	4108	4496	4364	1588
Truck Tires
000 units
Total	1771	2191	2278	2121
% China	41.8%	38.3%	34.1%	19.7%
China	740	840	776	417

Michelin Reports Stronger Tire Sales for October

Michelin has released its October 2009 and year-to-date figures for tire sales, and the figures offer a significantly more positive performance in some key sectors, though difficulties remain. In original equipment passenger car and light truck tire markets, October replacement sales were up in all three of Michelin’s reported regions compared to October 2008, with Europe up 6.4% (of which Europe excluding CIS was up 10.4%), North America up 6.9%, and China up 11.4%. However, October’s original equipment PC/LT tire sales were down 0.9% in Europe and 8.4% in North America compared to October 2008, though China showed strong growth of 75.2%. Given the difficulties of the first nine months of the year, YTD PC/LT sales are still down for both the OE and replacement segments in Europe and North America, though China’s market is up 52.7% in OE and up 14.4% in replacement YTD.

Radial truck tires also posted stronger results in October, at least on the replacement side. Replacement truck tire sales increased 0.4% in Europe including CIS, 16.8% in Brazil, 12.7% in Japan, and 12.1% in China. Among Michelin’s reported regions, only the North American market saw declines in truck tire replacement sales in October, which totaled 3.1%. However, original equipment radial truck tires continued to show steep declines across all regions in October 2009 compared to October 2008, with the steepest percentage declines (60.5%) in Europe including CIS.

Reflecting the deep and prolonged downturn in this segment, truck tire year-to-date figures were down nearly across the board in both the OE and replacement segments. The lone exception was China’s replacement sales, which were up 0.5%.

The full results are here.

Bridgestone to Close Last Tire Plants in Australia, New Zealand

Australia and New Zealand will lose their last tire manufacturing capacity based on Bridgestone Australia’s announcement on Friday that it plans to close its tire plants in Adelaide, Australia and Christchurch, New Zealand. Goodyear shut its tire plant in Somerton, Australia in June, leaving Bridgestone as the only producer in the region. Bridgestone Australia, a unit of Japan’s Bridgestone Corporation, said that, despite cost-cutting efforts, tire production at these plants was not viable because of international competitive forces. The closures will take effect at the New Zealand manufacturing plant by the end of 2009 and at the Australian facility no later than 30th April 2010. Bridgestone Australia will retain its headquarters in Adelaide, continuing its sales, distribution, retail and other business activities throughout Australia and New Zealand.

Here is the full announcement with additional details.

Goodyear to Close Spartanburg

Goodyear has announced that it plans to close its plant in Spartanburg, South Carolina by the end of the year. The plant, which employs about 90 people, produces retread material for commercial truck and aircraft tires. According to a Goodyear statement, the production will be incorporated into other Goodyear facilities in the US.

Upcoming Conferences

A list of upcoming conferences at which Notch will be presenting:

Carbon Black 2009 – Perspective in Asia Pacific
Location: Bangkok, Thailand
Dates: November 18-20, 2009

Tire Technology Expo 2010
Location: Cologne, Germany
Dates: February 9-11, 2010

Carbon Black China 2010
Location: Chongqing, China
Dates: April 18-21, 2010

Cooper Expanding at Texarkana

On Monday, October 5, Copper Tire & Rubber announced that it planned to increase production capacity at its tire plant in Texarkana, Arkansas by January 1, 2010 in response to stronger demand for its tires.

The full text of the press release is below.

Cooper Tire’s Arkansas Operation Moving to Seven Days

FINDLAY, OHIO, OCTOBER 5, 2009 — COOPER TIRE & RUBBER COMPANY (NYSE: CTB) has announced a plan to increase production capacity at its Texarkana, Ark., tire operations. Responding to growing market demand for its products, the operations will shift to a 24/7 operation. The new production schedule will begin January 1, 2010, and approximately 200 additional employees will be required to support the increased production volume. The shift in production will be accomplished over several months in 2010. The facility produces passenger and light truck tires for the replacement markets.

“We are excited about this opportunity to enhance our production capabilities,” said John Bodart, Cooper Tire’s Vice President of Manufacturing for its North American Tire Division.

Cooper has also recently announced expansion plans at its Tupelo, Miss., plant and the continual ramp-up of its operations in Mexico. The Company’s Findlay, Ohio, manufacturing plant is also expected to increase production volumes.

“Through a focus on continuous improvement we are always in a process of improving our capabilities,” continued Bodart. “This allows us to deliver high quality, cost competitive products to our customers and consumers. These moves are logical steps that align with our strategic goals.”

Michelin Issues Cautious Outlook

From the Wall Street Journal (subscription required):

The recent world economic recovery is shaky and could soon fade, one of Michelin’s non-general managing partners said Wednesday.

Despite “the euphoria we have seen in the past weeks…we never had these signals [of recovery] and we still don’t have them,” Jean-Dominique Senard said in an interview. “The prospects in the coming weeks are not good.”

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The Cash for Clunkers programs in the US and Europe have undoubtably benefited third quarter tire demand, and with inventories so low, that has translated into stronger production levels. But the question of the hour is whether demand will hold after November. Without a more sustained recovery in consumer spending, the third quarter recovery will become a blip in a continuing downturn.

Toyo Moving Production from China to Japan Due to US Tariffs

Tire Business (subscription required) is reporting that Toyo Tire & Rubber Co. Ltd. will move production of consumer tires it makes in China for export to the U.S. to plants in Japan in response to the Obama administration’s decision to impose higher tariffs on Chinese-made passenger and light truck tires.

Toyo sources tires for the U.S. market from Cheng Shin-Toyo Tire & Rubber (China) Co. Ltd., its former joint venture plant in Kunshan, China. Toyo and Taiwan’s Cheng Shin Rubber Ind. Co. Ltd. set up the joint venture in 1995, but Toyo disclosed in early September it is selling its share in the venture and instead will build its own plant in China.

Cooper Breaks Ground on Tupelo Expansion

On Tuesday, September 22, Cooper Tire & Rubber held a groundbreaking ceremony for a $7 million expansion of its tire plant in Tupelo, Mississippi. The plant currently occupies more than 1.6 million square feet and employs more than 1,250 people. Construction is set to begin this month on a 32,000-square-foot addition, which will include a new mixer as well as a new mixing building. The project is expected to be complete by April 2010.

Pat Jodon, Plant Manager for the Cooper Tire Tupelo, Miss., facility, said, “This expansion will enable Cooper to produce more technologically advanced products and will enable the Company to improve the competitiveness of its operations.

Here is the press release.

President Obama Imposes 35% Tariff on Imports of Chinese Tires

President Obama has placed tariffs of 35% on passenger and light truck tires from China, siding with the United Steelworkers Union and other labor groups, which had filed a complaint that surging imports were eliminating US manufacturing jobs. The duties will begin September 26 and last for three years, dropping 5% per year (i.e., they will decline to 30% the second year and 25% the third year). The tariffs were lower than those suggested by the International Trade Commission, which recommended tariffs of 55% the first year, 45% the second, and 35% the third. The new tariffs are in addition to an existing 4% duty on all Chinese passenger and light truck tires.

Bloomberg on the story.
The Washington Post on the story.
The Wall Street Journal on the story.