End-of-Life tires in China - Tyre and Rubber Recycling · Aeolus Tyre $969m Qingdao Doublestar...

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Future Tire - Cologne - May 2018http://TireIndustryResearch.com Slide no 1 of 21ELT tires in China by David Shaw

End-of-Life tires in China

David ShawCEO

TireIndustryResearch.com

[email protected]+44 208 647 1185+44 797 128 2336

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Agenda – 20 minutes (!)China tire industry

Cars and trucks OE and replacement

Wider environmental issuesEmissionsBlue Sky legislationSelf-sufficiency.

End-of-life tiresOnly recently become an issueHow many?Projections for futureState-guidance

RetreadingDomestic companiesInternational companies

RecyclingHow much - where it goesSpecific projects

PyrolysisHow much - where it goesSpecific projects

Q&AFeel free to interruptHappy to respond to questionsMake this informal & informative

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$35000 mill

ChinaBridgestone

Hangzhou Zhongce Rubber $4529m

GITI Tire $3756m

Triangle Group $1635 (was $2712m)

Shandong Linglong Rubber $1884m

Double Coin Holdings $1800m

Xingyuan Tyre $1557m

Aeolus Tyre $1408m

Qingdao Doublestar Industrial $878mShandong Deruibo $992m

Shandong Jinyu Tyre Co. $1139m

Shandong Hengfeng Tyre Co. $1580m

Sailun Co. Ltd. $996mGuizhou Tyre Co. Ltd. $1068m

Shandong Shengtai Tyre Co. $1090mJiangsu Tongyong Tire Ltd. $874mShandong Wanda Tyre Co. $781m

South China Tire & Rubber Co. $574mShandong Hengyu. $623m

Shanxi Suanxi Tyre Co. Ltd. $571mShandong Sangong Tyre Co. Ltd. $461mXuzhou Xugong Tyre Co. $394mSichuan Haida Tyre Group Co. $366mChaoyang Long March Tyre Co. $316m

Xinjiang Kunlun Tire Co. $244m Qingdao Sentury Tire Co $287m

Shandong TaiShan $211m

Beijing Shouchuang Tire Co. $201m

Tianjin United Tire & Rubber Co. (TUTRIC) $112mHaoyou Tire co $120m

Shandong Bayi $201m

$30,648m$27,390m

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ChinaBridgestone

Hangzhou Zhongce Rubber $3395m

GITI Tire $3131m

Triangle Group $1144m (was $2437m)

Shandong Linglong Rubber $1346m

Double Coin Holdings $1065m

Xingyuan Tyre $1285m

Aeolus Tyre $969m

Qingdao Doublestar Industrial $741m

Prinx Chengshan $656.4m

Shandong Yongtai Group. $751m

Shandong Hengfeng Tyre Co. $1344m

Sailun Jinyu Tyre Co. Ltd. $1258m.

Guizhou Tyre Co. Ltd. $739.5m

Shandong Shengtai Tyre Co. $824m Jiangsu Tongyong Tire Ltd. $651.3mWeifang Yuelong Rubber Group $643.3m

Sichuan Haida Tyre Group Co. Ltd. $470.3mWanli Tyre & Rubber $526.7m

Shandong Zhongyi Rubber Co. Ltd. $450.6mShandong Yinbao Tire Group $381.9mShandong Rongsheng Tyre Co. Ltd. $370.3mQingdao Sentury Tire Co. Ltd. $295mShandong Sangong Tyre Co. Ltd. $292.7m

Xuzhou Xugong Tyre Co. Ltd. $258.9m Shandong Bayi Tyre Manufacture Co. Ltd. $270m

Shandong Wanda Tyre Co. Ltd. $243.3m

Shandong Huitong Tyre Co. Ltd. $164.8mShandong Taishan Tyre Co. Ltd. $197.8m

$24045m

$24,425mHaoyou Tire Co. Ltd. $149.1mYanchang Petroleum Group Rubber Co. $137.9m

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中国 China普利司通 Bridgestone

中策 Zhongce Rubber (3128.5m)

厦门正新 CST Xiamen (1804.6m)

玲珑 Linglong (1583.4m)

三角 Triangle (934.9m)

双钱 DoubleCoin (889.5m)

兴源 Xingyuan Tire (998.3m)

风神 Aeolus (1088.5m)

双星 Doublestar (1099.0m)

浦林成山 Prinx Chengshan (657.9m)

恒丰 Hengfeng Rubber Plastics (900.7m)

赛轮金宇 Sailun Jinyu (1507.6m)

Guizhou Tyre Co. Ltd. (贵州轮胎) $739.5mWeifang Yuelong rubber (藿렌禿질厥스) (648.9m)

Wanda Boto (万达宝通)(589.9m)

Jiangsu Jiangxi Tire (쉭轅쫴怯) (581.1m)Hengyu Technology (뷩倒옰세) (542.0m)Yinbao Tire (陵괜쫴怯) (535.7m)

Wanli Tire (万力) (522.9m)GST (江苏通用) (502.2m)Sichuan Haida Tire (愷뇽베댕쫴怯) (501.1m)

Shandong Goform (벌루厥居) (460.1m)

Yongfeng Tire (湛료쫴怯) (458.2m)Lorem ipsumHaohua Tire (猿빽쫴怯) (444.1m)Joyroad (櫓寧厥스) (439.9m)

HAWK Rubber (봉옹벌셥厥스묏撚) (209.9m)Sanli Tire (힛적쫴怯) (223.3m)Long March (浪马) (250.6m)

Bayi Rubber (검聾厥스) (330.3m)Sentury (森麒麟) (391.3m)$23214m

$25500m

Tire Industry in China

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OE and replacement

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2008 2009 2010 2011

Replacement

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76.5m 94.2m 117m 140m 164m 190m 221m 254m 288m

123m149m

186m213m

241m

280m

321m

359m

403m

46.9m51.6m

68.7m72.3m

77.5m89.5m

99.5m

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115m

Car tire demand in China 2008 – 2016

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Blue Skies policies started in early 2017First targets were heavy fuel oil boilers; steel factories etcFactories closed if they could not upgradeLow-end tire pyrolysis plants were high on the listCapacity for 7.3mn ELT tires/year eliminated in 2017 (official data)

7 policies for next three years1. Defence of the blue sky 2. Diesel truck pollution control 3. Urban black water treatment 4. Comprehensive management of the Bohai Sea 5. Yangtze River conservation and repair 6. Water source protection 7. Agricultural and rural pollution control

Government environment activity

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Current ELT situation2017: around 370mn units = 13.5mn tonnes, growing at 8%-10% annually2020: up by 50% to 500mn units / 20mn tonnesSee next slide

Disposal routes (until 2017)Small, family-run collection & recycling - Heavy pollutionVery limited retreading - tends to be unprofessionalWestern brands seeking to build retread business with fleetscrumbed rubber goes into GRG products - up to 5mn tonnes/yearReclaim/recovery quite popular

Since 2017Environmental policies closed small businessesGovernment seeking to promote retreadingGovernment policies driving investment & research into ELT management

Scrap tires have been off-radar

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Category PCR & LT TBB/ TBR Total

Car PARC 2017 170mn 47mn 217

Avg Tires per Vehicle 4 12

Tires in use (mn) 680 564 1,244

Percentage replaced each year (%) 20% 45%

Percentage retreaded (%) Zero 2%

Annual Waste Tire Amount (mn units) 136 244 380

Waste Tire Output (Tire/Ton) 130 18

Annual Waste Tire Output (mn t) 1.046 13.54 14.59

Source: Ministry of Public Security, as of the end of 2017

ELT tire data

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Government policies since 2017January 2017: “Guidance for Accelerating the Development of the Re-newable Resources Industry”, • Tire retreading; • Product quality monitoring and management• Research into waste tire rubber powder• New rubber recycling technologies• Thermal cracking production technology.

August 2017” China issued documents on the Waste Tires Recycling Industries, and on solving the environmental problems of the waste tire recycling industry.

Government also released “Retreading Industry Access Conditions”, and “Access Conditions for the Comprehensive Utilisation of the Waste Tire Industry”, requires capacity of no less than 30,000 units.

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Official support from governmentTire company chairman say they support it (They don’t really)

Real view of tire makersEach retread is seen as a lost sale of a new tireRetread technology, training and skills are minimalTruckers do not care for casings; life can be as little as 20k - 30k km

International tire makers gaining some success in bus fleetsBeijing (and other cities) bus fleet has many thousands of vehiclesHeavily targetted by Michelin, Bridgestone and otherseg Deppon Logistics trials since 2008, more usage from 2012-2017Deppon has said that in 2018 it will begin the gradual introduction ofretreaded tires across its fleets in 25 cities, raising retreads in use to 30%

Retreading

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March 2018NPC Member & President of the LinDa Group, Li Xiaolin, proposes “Government Subsidies for Waste Tire Pyrolysis (Thermal Cracking) Power Generation”

March 2018 - CRIA urges cautionTraditional processes:

• Retreading • Prototype utilisation • Vulcanised rubber powder • Recycled rubber • Pyrolysis • Burning for energy recovery is used less in China than elsewhere

Dynamic situation

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Pyrolysis gets a bad nameHigh investment but low utilisation - many enterprises fail

In September 2017, Vanlead (Wanli) cooperated with Enviro to invest CNY400mn in a 30kt/year waste tire pyrolysis project in Guangzhou (cancelled).

In November 2017, Techcent invested CNY700mn in a 200kt/year waste tire pyrol-ysis project in Sichuan.

In December 2017, Double Star invested CNY600mn in a 200kt/year waste rubber pyrolysis project.

In December 2017, the Sound Group and Jinan Hengyu jointly invested CNY500mn in a 100kt/year pyrolysis project.

In January 2018, Beautiful China built a new 100kt/year waste rubber pyrolysis project.

CRIA analysis: “Pyrolysis produces carbon black (35%), pyrolysis oil (40%), bead wire (15%), and pyrolysis gas (10%). Apart from low value products, the process also includes environmental and safety risks.”

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CRIA says can process rubber by reclaim many timesGeneral view that “reclaimed rubber can only be recycled three times.”The CRIA has dismissed this view.

Tensile strength of reclaimed rubber must be at least 8.0MPa, and tire makers must use at least 1% reclaimed rubber to meet the production requirements.

CRIA: replacing 1 ton raw rubber with 3 tons of reclaimed rubber could effectivelyalleviate China’s NR scarcity.

Top tire makers studying tire recycling with ELT departmentsZhongce, Wanli, Double Star, Double CoinChongqing

AeolusMesnacShaanxiBeautiful China

Specific projects

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Announced on 20 December 201730kt/year pyrolysis with Scandinavian Enviro Systems

Environmental legislation (updated in November 2017)Limits use of land to tire production and prohibits chemical processes with a flash point below 60°C

Future:May go forward, if new land can be assigned

Wanli/Vanlead & Enviro

http://tireindustryresearch.com

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Joint venture with Beautiful ChinaOn April 3, Beautiful China Holdings Co. Ltd, a Hong Kong listed company, and Eco-Star signed a “non-legally binding” cooperation framework agreement for Beautiful China to invest in two wholly-owned subsidiaries of Eco-Star:

Eco-Star is a wholly-owned subsidiary of Double Star and develops recycling technology and equipment.

CapacityFour pyrolysis lines, due on stream in H1 2018. Investment of CNY46.66mnCan process 60,000 tons / year of tires

Annual production26,000 tons of fuel oil22,000 tons of carbon black7000 tons of steel cord.

Double Star’s pyrolysis unit

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Chongqing waste tire project

Chongqing Zhongxian Bringing forward its 200kt/year renewable resource distribution platform,Includes 15kt/year waste tire rgranulation lineIncludes 20kt/year reprocessing of waste plasticsThe main work on the project is already completed. Due on-stream before the end of June 2018.

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Deheng Environmental Technology Ground-breaking on March 8 for a new “100 ton / year waste tire recycling unit” Location: Liquan County, Xianyang City, Shaanxi Province.Two phases each with a single tire pyrolysis line of 50kt/year The total investment of the project is CNY307mn. Pyrolysis lines wil be fed with ambient granulate

Planned annual output is 34,000 tons of carbon black, 12,000 tons of steel cord, 16,000 tons of light oil, 24,500 tons of diesel oil, and 3,220 tons of heavy oil.

Shaanxi tire recycling unit

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ELT issues becoming more high profileMain tire makers investing in ELT management technologiesHuge thirst for information on recycling technologiesOpportunities for tires-to fuel projectsPyrolysis getting a bad name

Government involvementBlue Skies policies‘Access Conditions’ on retreadersEncouraging ‘green’ technologies

RetreadingCurrent infrastructure is extremely limitedRoughly 2% market penetrationInternational majors making limited progress

Conclusions

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Tire Industry Research News

Twitter @TireIndustry

Opinion, Commentary, Analysishttps://www.linkedin.com/today/author/7706927

Market Research & informationChina Tire Newsletter (Weekly)Global Tire Industry newsletter (Monthly)Global tire analysis 2017More coming in 2018

Conference planningTire technology -Hanover 2018-19VDI conference

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China Weekly Newsletter

Page 1 of 11 — Week ending 18 May 2018 © 2018 Shaw Information Services Ltd

China Tire Intelligence reportWeek ending 18 May 2018

This newsletter contains information about the tire industry in China. The information is provided in good faith, but it is not advice, and should not be treated as such. Without prejudice to the generality of the foregoing paragraphs, we do not represent, warrant, undertake or guarantee that the information in this newsletter is correct, accurate, complete or non-misleading.We will not be liable to you in respect of any special, indi-rect or consequential loss or damage.

Compiled by Shaw Information Services trading as Tire Industry Research© 2018 Shaw Information Services Ltd

For subscription [email protected]+44 208 647 1185

www.TireIndustryResearch.com

ContentsSection 1: Outlook 2US holds hearing for 25%+ Chinese duties 2MIIT develops roadmap for low-emission trucks 2Tire companies hold shareholders’ meetings 2

Section 2: Domestic tire makers 3Guizhou Vietnam Plant to be on stream in 2019 3Luxxan releases Five-Year Brand Plan 3Aeolus answers SEE questions 3Xingyuan publishes 2017 data 3China and Egypt form JV tire company 3Prinx Chengshan man named as top craftsman 4Sailun Jinyu buys Canadian tire dealer 4Double Star seeks court relief in Toyo case 4Tire company assets to be auctioned 4Wanli helps CRRC develop new traffic tires 4SLJY holds drift competition ceremony 4Rumour: Shengtai and Xingyuan to break up? 4Triangle receives more land compensations 5Triangle uses funds to buy financial products 5Triangle organises Indonesia trip for dealers 5Tire Company real estate to be auctioned 5Huadong Rubber to acquire Longyue Rubber? 5Huasheng Rubber leases Goform capacity? 5SLJY 2017 result: capacity data 5Wanda Boto passes environmental audit 5

Section 3: International tire makers 6Kumho to hold meeting in July 6Kenda increases investment in Tianjin plant 6CST publishes Q1 results 6Cooper wishes to develop Chinese market 6Trelleborg promotes Agri tires in Mongolia 6Kenda publishes Q1 results 6Kumho Tire to dispose of defence business 6

Section 4: Statistics and data 7Shandong tire exports rise in Q1 7Chinese TBR exports rise sharply 7CAAM: China commercial vehicle data for April 7CAAM: Motorcycle production declined in April 7CAAM: China passenger car data for April 7Vietnam’s inner tube exports to China surge 7

Section 5: Upstream and suppliers 8Double Star starts up Intelligent Manufacturing 8Qingdao CB company to be auctioned 8MOFCOM to hear views on NBR from Japan, Korea 8Zhongtou invests in green rubber production 8CRIA holds Reinforcement Material Workshop 8CRIA discusses prospects for rubber additives 8Six deaths at petrochemical company 8Hainan to create rubber exchange 8Hainan NR clone improves yield by 30% 9Silica company increased capital 9

Section 6: Retail and online activities 9Double Star works with gas stations to sell tires 9CST builds TMALL bicycle tire flagship store 9

Section 7: Environment & recycling 10Qingdao company hit by 2 environment fines 10

Section 8: Other activities 10Guangrao Tire Expo opens 10AQSIQ releases second list of 3S tire companies 10Jinan issues penalties on mismatched treads 10Six tire firms enter Shandong’s Top-100 list 10Shandong government awards tire companies 10Tire dealers fined after borrowing CNY60mn 11GRTAE exhibition summary 11

Return to Contents page

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Global Monthly Newsletter

Page 1 of 37 — May 2018 © 2018 Shaw Information Services Ltd

The newsletter contains information about the global tire industry. The information is provided in good faith, but it is not advice, and should not be treated as such.Without prejudice to the generality of the foregoing paragraphs, we do not represent, warrant, undertake or guarantee that the information in the newsletter is correct, accurate, complete or non-misleading.We will not be liable to you in respect of any special, indi-rect or consequential loss or damage.

Global Tire Intelligence reportCompiled by Shaw Information Services trading as Tire Industry Research© 2018 Shaw Information Services Ltd

For subscription [email protected]+44 208 647 1185

www.TireIndustryResearch.com

May 2018 edition: Dateline: 30 April 2018

About this publicationThis document has been prepared in response to demands from the global tire community for insight into all aspects of the global tire industry value chain.

During conversations with many Chinese people, we identified a strong need in China for a source of information on the global tire industry that lies outside of the official Chinese govern-ment channels.

Furthermore, in conversations with industry analysts, we identified a need for a regular publication that explains and analyses key developments in the global tire industry.

About the author. This report is compiled by David Shaw. Mr Shaw publishes widely on LinkedIn about the tire industry. He has a 30-year track record reporting on the global tire industry at the highest levels. He publishes market research reports; offers a weekly news service and manages conferences globally.

For more information see http://TireIndustryResearch.com

News & analysisSection 1: Investments and closures 19

Section 2: People 20

Section 3: Legislation and government 21

Section 4: New business models 23

Section 5: Statistics 24

Section 6: Perspective 27

Section 7: Raw Materials 29

Section 8: Company information 30

Section 9: Company results 34

Section 10: What’s Green 35

Opinion & commentaries:

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Return to Contents page

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Double Star to take control Kumho Tire

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China Tire report April

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0mn

1000000mn

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8000000mnRest of EU

FranceItalySpainGermanyNetherlandsU.K.

DNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJ

EU imports of PCR tires (401110) from China by volume (estimated)

201660.27m

201549.52m

201763.8mn (est) Import-Export data P12

US imports of tires from ChinaEU imports of tires from China

CRIA conference ‘18 P6CRIA: Tire managers discuss industry issuesCRIA Shi Yifeng: Problems in tire companiesCRIA data shows sharp fall in 2017 tire profitsXu Wenying: Key tasks for the CRIA in 2018CRIA releases 2018 Top 100 rubber companies

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All-Season tires still fall short P3What’s the future for All-season tires in Europe?AA Grades to be required under new EU rulesGlobal regulations on tires

Carbon black going short P10

WBCSD to promote sustainable NR

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‘Worst tire in the world’ - Goodyear’s G159

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Thank you for your attentionDavid Shaw

CEO, [email protected]

+44 208 647 1185+44 797 128 2336

R E S E A R C H

End-of-Life tires in China - Tyre and Rubber Recycling · Aeolus Tyre $969m Qingdao Doublestar...

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