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China's tyre output growth slows as exports ease

SHANGHAI, Aug 12 (Reuters) - Growth in China’s tyre industry, the world’s biggest, slowed in the first half of the year as a global economic slowdown hit exports while raw material costs eroded profit margins, the China Rubber Industry Association said on Tuesday.

Tyre output by the association’s members grew 12 percent in the first half from a year earlier, to about 124 million units, said a senior association official, who declined to be identified.

“In the past, we had seen the growth rate at about 18 percent,” said the official.

The association’s 46 members account for about 70 percent of China’s tyre production, the official added.

“Although tyre output and sales growth was relatively strong, profits fell sharply, mainly because the prices of raw materials, especially natural and synthetic rubber, have surged, eating into companies’ profits,” the association said in a statement on its website (www.tyrefh.org).

It also warned that, if rubber prices do not ease, 30 percent of tyre producers would be pushed into the red by the end of the year.

Spot prices of natural rubber rose about 30 percent in the first half of the year, to 27,000-28,000 yuan ($3,934-4,080) a tonne, traders said.

“The rising price has forced some small and medium-sized tyre producers out of business,” said a Shanghai-based trader.

China's largest tyre makes include GITI Tire 600182.SS, Hangzhou Zhongce and Double Coin 600623.SS, while global tyre heavyweights, including Goodyear Tire & Rubber Co GT.N, Bridgestone Corp 5108.T and Michelin MICP.PA, have also set up plants in China.

Car sales growth is also slowing in China, the world’s second-largest vehicle market, with July showing the lowest annual increase in two years as consumers delay purchases due to a fuel price hike and easing economic growth. (For details, click [ID:nSHA8076])

The slowdown in the automobile industry is likely to affect the tyre industry within a few months, traders and industry officials said. ($1=6.863 Yuan) (Editing by Edmund Klamann)

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