By Jane Ho, Crain News Service
GUANGDONG, China (April 17, 2015) — China's tire makers, already dealing with anti-dumping tariff actions by the U.S. and the Russian-led customs union of eastern Europe, face an even bigger threat in one expert's opinion — new Chinese standards on the use of domestic rubber vs. imported that could increase production costs by hundreds of millions of dollars a year.
The new standards redefine “tariff-free” compounded rubber as that with a maximum of 88 percent crude rubber in its composition as opposed to the 95-99.5 percent under the current standard, according to Shen Jinrong, chairman and general manager of Zhongce Rubber Group, speaking at the 2015 China Rubber Conference in Guangzhou.
According to Mr. Shen, the intent of the new standard is to raise the price of domestically sourced natural rubber. Last year China produced 850,000 metric tons of natural rubber, or 17 percent of the nation's total natural rubber (including compound rubber) consumption.
This is basically forcing Chinese companies to import natural rubber with a tariff of about $245 (1,500 yuan) per ton, or to switch to synthetic rubber if possible, Mr. Shen said, noting that China imported 1.6 million tons of compound rubber last year.
Applying the new standard to that amount of imported rubber, he said, would translate to nearly $400 million in additional costs for China's rubber sector companies.
Regarding the U.S. anti-dumping tariffs on Chinese consumer tires, Mr. Shen said the duties will affect about $3.3 billion worth of product.
China's export of passenger car and light truck tires to the U.S. account for up a third of such tires' world total export volume, or 15 percent of the global output, Mr. Shen said.
China's tire makers' operating rates are plummeting. In February the China Rubber Industry Association (CRIA) tire subcommittee's member companies suffered a 5-percent decrease in radial tire output from February 2014.
In addition to the U.S. tariffs already in effect, China's tire makers face an anti-dumping investigation by the Eurasian Customs Union of Belarus, Kazakhstan and Russia, delegates at the conference were told.
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This report appeared on the website of European Rubber Journal, a U.K.-based sister publication of Tire Business.
