Zhu Jun Explains The Current Status Of The CTRA

At the recent Reifen China show, Chairman Zhu Jun of the CTRA outlined the current status and challenges facing the Chinese retreading sector. Since the Chinese sector is indubitably going to impact on retreading internationally, Retreading Business thought that the details of his speech would be of interest to our readers.

The structure of the CTRA

The CTRA was established in April, 1987 with the approval of the National Economic Committee, and registered under Government Political Affairs. It is the governing association, and the only national industry organization that deals with tyre retreading and the remanufacturing and recycling of waste tyres. It is currently under the National Owned Assets Control Committee, and its operation is under the guidance of the National Development and Revolution Committee, industry and information division and business division.

The scope of the association covers one industry, two sectors and four professions. The one industry is the tyre retreading and utilization industry, the two sectors are used tyre retreading and waste tyre recycling, and the four professions are used tyre retreading, rubber dust recycling, separation and devulcanisation. Up to the end of 2009, the association had 510 companies as members, of which 215 were retreaders. Used tyre recycling and utilization as well as University Science study members account for a further 295.

In the association, there is a secretariat department, a technical committee, a business management committee, a professional education training committee, a rubber dust application committee, a professional tyre retreading committee, a professional equipment and mould committee and a recovered rubber branch. The association also has its own publication called Chinese Tyre Resources Comprehensive Utilization magazine.

The tyre retreading industry in China

China has in the past seven years become the number one tyre consumer in the world. According to the statistics from the World Rubber Study Organization, our natural rubber consumption volume is 5.995 million tons, accounting for 27% of the world's total consumption. More than 70% of local natural rubber and more than 50% of synthetic rubber products are for the export market. The contradiction between demand and supply is very obvious. The country's tyre output in 2008 was 550 million units, used tyre arisings stand at about 200 million units, and the retreaded tyre figure has reached 12 million units. Recycled rubber has reached 2.5 million tons and rubber dust production 250 thousand tons. According to the Chinese Statistic Department's estimation based on the 55 main tyre retreading companies, retread industry production has reached 230,000 Yuan and the total profit is 15,000 Yuan. There are 50 retreading companies that have a total annual output of more than 50,000 pcs each, while 15 retreading companies reached 100,000 pcs.

Among them, the biggest tyre retreading company's total annual output has reached 300,000 pcs. (From those figures it doesn't take a great deal of imagination to understand the global impact of the Chinese tyre sector)

Recent key development features

Obviously there has been a development in size. According to uncompleted statistics, there are approximately 1000 retreaders in the country, and there is an annual production capacity of 20 million units. There are also about 1000 companies recycling rubber and rubber dust, the annual production capacity of whom is 3.50 million tons of rubber is 1 million tons of rubber dust. There has been the development of industrial groups with government owned, private and foreign owned companies, and this is now dominated by privately owned companies. There have been several key technology breakthroughs

a. Originally the key equipment for tyre recycling, producing rubber dust and recycling rubber was imported from other countries, but now it can be made locally, and all the Chinese produced equipment meets or is very close to international standards.

b. Tyre retreading has changed from hot cure bias tyre to precure radial tyres.

c. The usage of advanced inspection machines has made the inspection of retreaded tyres more scientific and reliable, which ensures the quality of the product.

d. The active agent of rubber recycling now is environment friendly, with fewer emissions compared to the previous one, which was highly polluting to the environment. The new replacement active agent can reduce energy consumption and emissions.

e. Rubber dust devulcanisation technology has minimised movement, operates at low temperature, at a standardised pressure and has cleaner emissions.

The main challenges for the industry

The Retreading Sector:

Firstly, China does not have any enforcement on technical quality standards. There are a significant number of poor quality new tyres; after use they are not able to be retreaded. Secondly, China does not have any enforcement on the inspection of maximum wear requirements. The consumers have no tyre maintenance awareness; the vehicles are usually over-loaded and this results in serious wear damage and many tyre casings have been damaged due to over loading. Thirdly, some of the retreaded tyres do not meet quality standards, plus there are many fake retreading operations and fake retreaded tyres, which directly affect the reputation of retreaded tyres.

The Recycling Sector

Firstly, driven by profit, the rubber recycling companies continue to develop blindly. Low set up costs result in over supply. There are two extremes, some companies have a production capacity of more than 10,000 tonnes, and the biggest company has reached an annual production capacity of 80,000 tonnes while there are small companies producing only about 1000 tonnes. Secondly, some of the companies use low technological standards and consequentially create serious environmental pollution.

Thirdly, the rubber recycling producing companies suffer from a lack of policy support. Even those, which have reached a good environmental standard are also unable to enjoy the tax incentives that the retreaders and rubber dust manufacturers enjoy.

There are also reasons for the slow development of the internationally recognized environmentally friendly rubber dust manufacturing industry: Firstly, because there is poor policy guidance and secondly, there are some problems with the equipment and technology used. Thirdly, is the lack of capital to invest. Last but not least, the R&D into lower stream products using rubber dust is lagging behind, which affects the smooth development of the market.

There are also problems in waste tyre recovery and re-use: The first point is that China does not have a relevant department to check standards; Secondly, companies don't have any high volume uses for the product; Thirdly, the investment required in this sector is higher, the price of buying waste tyres being higher and the market does not favour promoting the sector in any sizeable fashion. Fourthly, it is very difficult to stop the indigenous oil processing method that is not environmentally friendly, and this has affected investors' confidence.

Further challenges or barriers include the fact that China does not have proper management regulations on waste tyre recycling and utilization. The structure of waste tyre recycling is not complete. In spite of the figures given above for tyre production and waste tyre arisings there is a lack of waste tyres and the government only allows a certain percentage of waste tyre imports.

The key issues that need to be resolved:

Poor production and management methods need to be improved. China must gradually resolve the situation of a business, which is at one and the same time both thinly spread about the country, yet concentrated in certain areas. The widespread nature of the industry at the moment creates severe competition which limits profits and minimises opportunities for development.

At the same time the concentration of large operations around "hotspots" creates conflicts of interests between companies. In order to fully utilize waste tyres, the CTRA suggests that the government should summarize the old truck tyres import trial experience, and ease the import of used tyres to all the big retreaders, to gradually ease the current lack of resources.

The CTRA also suggests that the taxation department extends the taxation policy offered to the retread sector to waste tyre recycling and recovery. It would also be of great assistance to the economy and the retread sector if it were required by law that new tyres must have a multiple retreadable design, a high manufacturing standard and that there be a prohibition of sub standard tyres in the marketplace. Also, some effort should be put into dealing with overloading and excess tyre wear.

The Government also needs to establish the market entry structure in order to set the market standard.

The CTRA suggests that the Government Quality Control department should randomly inspect the product, increase the quality awareness among the retreaders and increase the quality of retreaded tyres.

The recent key tasks of the industry

During recent years, the government provided the rubber resources recycling and utilization industry with a series of policies on guidance and support. Waste tyres that can be used as recycled resources have been promoted and widely recognized, which provides a great development opportunity for the tyre retreading and utilization industry. The use of waste tyres as resources can not only significantly reduce the rubber, steel wire and energy consumption, etc, but also can reduce the amount of waste tyres. The industry has gained the government and society's attention, which has been recognised in the following areas:

o The Industry and Information Department is currently working on "Waste Tyre Comprehensive Utilization Guidance Advice". This will be the first rules and regulations from the government as guidance for our industry development.

o The Industry And Information Department has entrusted our association to come out with a "Waste Tyres Comprehensive Utilization Plan". We will be undertaking serious research and study, listening to the professional suggestions from all sectors and industries, and will develop a plan based on the feedback. When we complete the plan, it will help the overall development of the industry.

o The CTRA aims to further standardise the rules on industry access and industry reports to the information department.

o The Business Department has already started a recycling resources structure, and has an ongoing trial in 24 provinces. This year, it has identified 29 cities as the second batch of recycling resources structure trial units.

o Our association's "Regarding Development Trust Grade Evaluation Overall Solution" has been approved by the Business Department, The State Owned Assets Supervision and Administration Commission of the State. The association will begin this task in 2010. This shows that our industry has taken an important step towards maturity and recognition.

Issue 2010/1