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Taiwanese Tire Makers Plan Capacity Expansions

2014/01/03 | By Quincy Liang

With the recent forecast by the International Rubber Study Group (IRSG) for a 4.5% production volume hike of natural rubber in 2014, major tire makers in Taiwan anticipate more lucrative operation in the year, thanks to  lower material prices and continually rising global demand.

Latest forecast data released by IRSG, an inter-governmental organization composed of global rubber producers and consumers, indicates that the supply surplus of natural rubber, due to mainly greatly increased planting of rubber trees 2006 to 2008, is expected to continue into 2014 with overall production to rise to 1,220 tons, a 4.5% annual increase from 1,170 tons in 2013. All signs  show that natural-rubber prices are facing downward pressure.

Eyeing the high-potential tire market in Indonesia, the world's fourth-largest populous nation, and the No.3 powered two-wheeler (PTW)-tire consumption market, Cheng Shin Rubber Ind. Co. Ltd. (CST), a major tire maker in Taiwan, plans to pour about NT$10 billion (US$333.3 million) into constructing a  factory in the targeted market.

CST is to begin construction of the new Indonesian tire factory in mid-2014, and the new facility is to kick off mass production of PTW tires (in the initial stage) and passenger car radial (PCR) tires (later on) in the second half of 2015.

CST's new factories in Chongqing (Sichuan Province), Xiamen (Fujian Province), and Changzhou (Jiangsu Province) of China, as well as Doliu of central Taiwan have started  operation in-turn in 2012 and all have turned profitable in the first quarter of 2013. To meet increasingly stronger demand from China, the Taiwanese tire maker has begun evaluating different capacity-expansion projects at the mentioned new plants. CST recently announced that its capital spending in 2014 would remain at the similar level of about NT$20 billion (US$666.7 million) as 2013's.

Kenda Rubber Ind. Co., Ltd., another major tire maker in Taiwan, has been aggressively trying to generate from PCR, PTW and bicycle tire  categories one-third each of the company's overall revenue. The firm has announced that its capacity-expansion projects in 2014 to focus on PCR tire production in China.

According to Kenda, it will upgrade the daily PCR tire production capacity to 10,000 units (from 3,000 currently) at its PCR tire factory in Tianjin of China; while the firm is scheduled to kick off construction of a new radial tire factory in Kunshan, Jiangsu Province of China in the first quarter of 2014. Total investment in the new Kunshan facility will be about US$100 million, Kenda said, and the final target annual production volume will reach 2.1 million units, to generate annual revenue of about NT$15 billion (US$500 million), with first-stage production planned for  2015, the company said.

Federal Corp. and Hwa Fong Rubber Ind., Ltd. also have mapped out capacity-expansion plans for 2014.

Federal said that it has bought   land in Guanyin, Taoyuan County of northern Taiwan, and plans to begin constructing a factory in the second half of 2014, to have annual production capacity of some six million PCR tires.

Hwa Fong's second Thailand factory is kick off mass production of PTW tires in the third quarter of 2014; and the Taiwanese company also plans to set up another factory in Ho Chi Minh City of Vietnam with daily production capacity of 30,000 PTW tires.