Middle East tire project develops rapidly

April 26,2024

As one of the regions with the fastest growth rate of tire imports in the world in recent years, the Middle East has received widespread attention from the industry. Many tire companies have targeted this market and announced plans to invest in and build factories.

According to incomplete statistics, there are currently seven major tire projects planned/under construction in the Middle East, with a total investment of approximately US$4 billion.

Saudi Arabia plans two major tire projects

In March this year, Kumho Tire reached a technology licensing agreement with Saudi Arabian tire manufacturer Blatco Co., the former will provide technical support to the latter over the next 20 years for the production of passenger car tires sold in Saudi Arabia and the Middle East.

It is reported that this agreement is a follow-up to the signing of a memorandum of understanding between the two companies at the South Korea-Saudi Arabia Smart Innovation Growth Forum to be held in 2022, aiming to establish a joint venture tire company.

The factory jointly built by Blatco and Kumho is scheduled to start construction in mid-2024, with a total investment of US$1.5 billion.

The first phase plans to produce 7.5 million passenger car, light truck and truck and bus tires per year; in the second phase, the production capacity will be doubled to produce 15 million tires annually. The short-term goal is to capture 15% of the Saudi market by 2026.

On October 26 last year, Pirelli, a subsidiary of Sinochem Holdings , signed a joint venture agreement with the PIF of Saudi Arabia to invest approximately US$550 million to build a tire factory in Saudi Arabia with an annual output of 3.5 million units.

According to the agreement, PIF will hold 75% of the joint venture's shares. Pirelli holds the remaining 25% and serves as a strategic technology partner, providing technical and commercial assistance. The factory is expected to start production in 2026.

The joint venture will produce Pirelli brand automotive tires and develop new local brands to cater to the Saudi domestic and regional markets.

Egypt may add three new tire factories

In September last year, Rolling Plus Chemical Industries Co. announced an investment of 1 billion euros in a new tire factory in Egypt. Egyptian Prime Minister Mostafa Madbouly attended the signing ceremony.

The new factory will be located in the Suez Canal Economic Zone, covering an area of 400,000 square meters, with an annual production capacity of 7 million tires. The construction will be carried out in three phases.

The focus of the first phase of the project is on-site construction and the construction of the passenger car tire production line, with an initial annual production capacity of 2.5 million tires. An investment of 400 million to 450 million euros will drive this phase of development, with the goal of meeting 50% of the local market's tire demand.

The second phase will add 3.5 million light commercial vehicle tire production capacity, with the goal of capturing 40% of the Egyptian market. The third phase of the project will once again increase the production capacity of 1 million truck tires.

Additionally, several private companies and the AOI are planning to produce tires in Egypt.

During the Chinese trade delegation's visit to Egypt in April last year, the two sides signed an agreement to increase China's investment in Egypt by approximately US$18.3 billion, including the construction of two tire factories in Egypt.

Specifically, AOI plans to build a car, light truck, truck and bus tire production facility in Ain Sukhna along the Suez Canal.

The second plant will build a heavy-duty tire plant for agriculture and heavy machinery in Amelia, Alexandria. At present, it has not been determined which Chinese companies will participate in the investment.

Projects under construction in Morocco and Pakistan

On October 21 last year, the construction of the first phase of Sentury’s Moroccan factory project started. The project can produce 6 million high-performance car and light truck radial tires annually, with an investment of US$297 million.

On October 24 last year, Sentury also passed the "Proposal on investment and construction of high-performance car and light truck radial tire project (Phase II) in Morocco".

In the second phase of the project, Sentury plans to invest US$193.0647 million in self-raised funds to build the "Annual production of 6 million high-performance car and light truck radial tires project (Phase II)" in Morocco.

The construction period of the second phase project is 12 months. The output in the first year of production is 3.6 million pieces, and the production capacity is 6 million pieces in the second year of production. After the project is completed, it is expected to achieve operating income of US$210 million and total profit of US$57.909 million in normal operating years.

On July 7 last year, Pakistani Prime Minister Muhammad Shahbaz Sharif met with the Chaoyang Long March Tire delegation led by Chairman Li Qingwen in Islamabad.

Chaoyang Long March Tire reportedly intends to increase tire production at its Pakistan factory to increase annual exports in this category to $200 million.

As early as July 2022, Service Long March Tire, the first all-steel radial tire production and R&D base jointly established by China and Pakistan, was officially put into operation.

The total planned investment for this project is US$250 million, and the current annual output of the first phase of the factory project is 740,000 sets.

With Pakistan's economic development in recent years and the improvement of highway network construction, its market demand for all-steel tires is increasing. After the completion of the third phase of the factory project, it is expected to be able to produce 2.4 million sets of all-steel radial tires per year.

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