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THAILAND
Norakit Intarakosit of Maris (2537) Co. Ltd.
Thai Retread Market Shows Signs of Revival
The retread market in Thailand is showing early signs of revival as the volumes of the larger retreaders have started picking-up since the beginning of 2018, with some of the major retreaders like the Chonburi based Sompong Rubber improving volumes by 10-15 per cent in the first quarter of 2018.
One of the reasons for this is that surging consumption of tyres in China has led to a dip in exports to Thailand and other countries in the region. Besides, local authorities have been stricter in imposing penalties on overloading, forcing fleet owners to buy branded tyres, and positively impacting the improving volumes of retreads from the beginning of 2018. Chonburi is regarded as the hub of the Thai retread industry as it has the largest concentration of retread plants in the country, with almost 20 units functioning in Eastern Province. “70 per cent of the country’s retreading is done in Chonburi,” said Norakit Intarakosit of Chonburi based Maris.
While the South Asian country has about 70 retreaders, six of them have high volume turnover. “The ‘big-six’ are European standard plants with the latest equipment and could compete with any mechanised retread operation in the west,” thinks Somchai Mongkoladisai of Indra Rubber.
The entry of tubeless radials has
popularised precure retreading in Thailand but the traditional hot cure process still hold ground. Chonburi based hot cure plants still operate profitably, and their business has not shown any signs of stagnation due to the increasing share of precure retreading. Indeed, some hot retread promoters have serious expansion plans.
On the equipment side, Newera of Malaysia is one of the key plant machinery suppliers and has some kind of presence in almost all the plants. However, now a new wave of modernisation with European brands has begun to be visible in the various retread facilities in Thailand. Equipment from Matteuzzi and VMI is prevalent in a number of retread operations, and some of the plants have even invested in expensive shearography machines, further indicating improving retreading standards in Thailand.
Interestingly, Myanmar and Laos are markets where a number of Thai retreaders have plans to sell retread tyres as well as opening of some kind of retread operations in the near future. The Myanmar market, in particular, is opening up and providing a new market for retreaders from ASEAN member countries to explore. Laos, meanwhile, provides the majority of workers for the Thai retread industry.
Maris forayed into OTR retreading a couple of years ago and retreads around 600 OTR tyres annually. The plant is installed with a single 4-tyre OTR Akar Makina chamber to retread 1800/25 size tyres.
When asked if any upgrades had been carried out recently, he added, “It is a continuous process as we keep phasing out the old equipment, replacing with the new. We have added three buffing machines, two
from Matteuzzi and one from Bandag in last two years.”
The majority of Maris’s customers are multinationals engaged in sending shipments through seaports. “Overall, the domestic market scenario is depressed but exports are improving, and there is a lot of logistic movements towards seaports, with fleets running on port assignments bringing business to us,” he admitted.
Shrinking Price Gap
a Challenge at Xin Rui
While high-end retreaders in Thailand are investing in the latest plant and equipment are experiencing a slight upswing in volumes, price-sensitive retread operators have consistently suffered a downturn in volumes.
between 2008 – 2013, when retread volumes were averaging around 2,000 by the precure process and 1,000 tyres by the conventional hot version every month,” said Rui Chen. Established in 2008, Xin Rui now
Rui Chen of Xin Rui Tyre Ltd.
Maris Focusing on Quality and Productivity
Chonburi based retreader Maris has announced that it has moved out of traditional hot cure retreading and shut down its compounding plant to focus on improving productivity. “Demand for precure retreading has surged in the last decade, whereas hot cure volumes have been depleted due to the changing preference for radials instead of bias ply tyres as well as continuing low margins in the traditional process. This has forced us to shut down the hot operation,” said Norakit Intarakosit of Maris (2537) Co. Ltd.
Maris initially forayed into retreading about four decades ago and retreads in between 4,000 – 5,000 tyres by the precure process each month. Earlier, it had a majority 60 per cent volume from precure and the remaining 40 per cent from hot cure but has closed the hot cure plant.
Maris also engaged in compounding in the past but shut down the facility about couple of years ago. “Thailand
is a member of regional trading bloc ASEAN (Association of South East Asian Nations) and member states have FTA (Free Trade Agreement), therefore, it makes more business sense to actually import from member countries instead of manufacturing tread rubber, especially when the product enjoys import duty exemption,” stressed Norakit.
Today, Maris imports tread rubber from Malaysian suppliers like Kayel, Maxrubber and Sun Rubber. The company operates three autoclaves of 22 tyres each, two from Bandag and one from Newera.
On the subject of streamlining the retread operation to improve productivity, he emphasised, “Our volumes have stabilised in between 4,000-5,000 units per month over the course of the last few years depending on season, and focus is now more on product quality and improving productivity in our highly competitive domestic market.”
Nakhon Ratchasima based Xin Rui Tyre Limited operates a traditional hot and precure unit and has experienced a consistent shrinking in volumes in the last five years. Nakhon Ratchasima, commonly known as Khorat, is located in the North East of Thailand about 220 km from Bangkok.
The plant is operated by a Chinese partner from Xingang, Rui Chen, who has seen much better times when the plant retreaded 3,000 tyres each month. “There was high phase
retreads almost a fifth of what it retreaded up to 2013. “Now, we hardly retread 600 tyres each month, 400 by precure and 200 tyres by hot process,” he informed.
The influence of low-priced imported tyre surged post 2015 and the price gap between new tyres and retreaded tyres shrunk drastically leading to a consistent downturn in volumes. According to Rui Chen the price of new tyres used to be around 9,000 Baht compared with 2,000 Baht for a retread. However, after 2014 this was
28 Retreading Business