All-steel tires: declining demand, rising inventory pressure, risk of write-downs

According to data from Golden Ten Data, the latest report from Zhuochuang Information indicates that the steel belt tire market is facing significant challenges. Over the past month, downstream production activities have continuously declined, causing end-user demand from factories and construction companies to drop sharply, no longer sufficient to absorb products from the market.

The outlook for steel belt tire dealers is currently very bleak. Data shows that most dealers experienced an increase in inventory levels in December, with only a few companies maintaining stable or even slightly reduced stock levels. The rate of inventory clearance by dealers has slowed considerably compared to previous months, clearly reflecting a less active market.

The contradiction lies in the fact that, despite weak demand, dealers still have to import additional stock to meet annual sales targets. However, a large portion of dealers have accumulated high inventory levels beforehand, creating significant pressure, leading them to tighten costs by strictly controlling new imports and trying to stabilize or slightly reduce their stock levels.

The situation becomes even more complicated as we enter January—the last month before the Lunar New Year. This period typically sees the lowest end-user demand of the year, with many downstream industries already on holiday since the end of last month. Dealers are now focusing on recovering receivables, with slow inventory turnover, while stockpiles remain difficult to sell.

Despite the heavy pressure, some dealers are still making certain additional purchases, which implies a risk of inventory devaluation in the near future. Zhuochuang Information warns that steel belt tire inventories are likely to continue rising, exerting significant financial pressure on companies. If this situation persists, provisions for inventory devaluation to handle excess stock will become an unavoidable issue.