By Jane Ho, Crain News Service
BEIJING (Dec. 3, 2014) — The China Rubber Industry Association (CRIA) has expressed strong disapproval of the new standards set by the Chinese government regarding the import of rubber compound compositions.
The new standard, reportedly being prepared by the Chinese government, redefines compounded rubber with a maximum of 88 percent crude rubber in its composition as opposed to the current regulations which allow 95-99.5 percent crude rubber constitution.
The new regulation for rubber import is slated to take effect on Jan. 1 amid calls for its delay by ASEAN suppliers.
According to CRIA, to custom-make 88-percent materials require large-scale internal mixers and the ASEAN suppliers currently lack capacity to provide such custom-made materials in bulk. The association has warned that the move could “disrupt the current stability in the market.”
Most of China's consumption of compounded rubber and standard rubber is imported from ASEAN countries. As no tariff is placed on these imports, the compounded rubber is often chosen as a substitute for standard rubber by China's tire makers.
According to Chinese media, currently many tire makers use compounded rubber as a substitute for standard rubber — the 95-percent-or-above crude rubber constitution makes such substitution possible, and it costs much less — there is a 1,200 yuan/ton tariff on standard rubber.
With the new regulation, materials with 95 percent-or-above crude rubber constitution will no longer have zero tariff, as they no longer fall into the category of compounded rubber.
Tire makers are, therefore, likely to either switch to more costly standard rubber, or have the 88-percent materials custom made, otherwise they can't be used as substitutes for standard rubber. The latter move would, however, also involve extra costs.
Analysts expect an increase in compounded rubber imports to China before the new regulation comes into force.
Thailand has voiced its concerns over the move, saying with the new standards, Thai rubber makers could stand to lose their share in the Chinese market.
Earlier in November, the Thai agriculture and cooperatives minister urged China to consider delaying its enforcement of new regulation for another year.
Pitipong Puengboon na Ayutthaya asked for the delay to allow time for Thai producers to adjust their manufacturing processes to meet the new standard.
Jan Ho is a China correspondent for European Rubber Journal, a UK-based sister publication of Tire Business.