Guizhou Tyre scraps plans for 3m unit TBR factory amid oversupply

Guiyang, China – Guizhou Tyre has scrapped plans to build a 3-million-unit high performance truck and bus tires plant, citing increased market supply of commercial tires over the recent years.

The Yuan2.3-billion (€300 million) project, first announced in July 2021, was to be completed at the Chinese tire maker’s existing site in Guiyang, Guizhou province.

In a 10 Jan statement, Guizhou said it is terminating the fund-raising process for the project and redirecting funds raised to date to an ongoing Yuan1.9-billion off-road (OTR) tire project.

Unveiled last May, the ‘intelligent manufacturing’ OTR plant in Zhazuo Town, in Guiyang, is slated to produce 380,000 engineering tires per year.

“In recent years, enterprises have increased production capacity of all-steel radial truck tires, and the market competition has become increasingly fierce,” said the Guizhou filing on the Shenzhen Stock Exchange.

The company went on to explain that, with rising costs, both its TBR capacity utilisation rates and gross profit margins for the tires had significantly decreased.

On the other hand, the construction machinery industry “has entered a new round of rising cycle since 2017”, the tire maker noted.

According to Guizhou, capacity utilisation rates of the company's all-steel OTR tire products remained above 95% throughout 2021 and 2022.

The gross profit margins of the product, it went on to say, is also higher than that of all-steel radial truck tires.