New rubber standard adds to China tariff woes

Guangdong, China – The US anti-dumping tire tariffs affecting $3.3 billion (€3 billion) worth of products and the anti-dumping investigation on Chinese tires by the Customs Union of Belarus, Kazakhstan, and Russia is casting a long shadow on China's tire-making sector – delegates to the 2015 China Rubber Conference in Guangzhou were told.

China’s export of passenger car and light truck tires to the US takes up a third of such tires’ world total export volume, or 15 percent of the global output, according to Shen Jinrong, chairman and general manager of Zhongce Rubber Group, which claims to be China’s largest tire maker.

China’s tire makers’ operating rate is plummeting. In February the China Rubber Industry Association (CRIA) tire subcommittee’s member companies had a 5-percent year-on-year decrease in radial tire output.

With those factors taken into account, Shen still considers China’s new standard for compound rubber imports an even bigger threat.

According to rubber sector veteran, the new standard intends to raise domestic natural rubber price. However, last year China’s natural rubber output was 850,000 tonnes, or 17 percent of its total natural rubber (including compound rubber) consumption.

The new standard redefines the tariff-free compound rubber with a maximum of 88 percent crude rubber in its composition as opposed to the 95-99.5 current standard.

This is basically forcing Chinese companies to import natural rubber with a 1,500 yuan (€225)  per tonne tariff, or to switch to synthetic rubber if possible.

“In 2014, China imported 1.6 million tonnes of compound rubber, and this [under the new standard] would mean a 2.4 billion yuan cost increase for China’s rubber sector companies,” Shen said at the CRIA conference on 7 - 10 April.