Calls for China to gain more control of rubber supply

ERJ staff report (DS)

Beijing - In a long report on the CRIA website, financial analysts track the development of China's rubber industry and its likely future.

The outlook is not good. Partly because increased raw material prices cannot easily be passed on to the consumers

The report notes that each 10kg car tyre consumes around 1kg of pure natural rubber (NR) and that NR accounts for up to 40 percent of the cost of production of each tyre.

The report adds, China's natural rubber consumption is 3.4 million tons, China's homegrown natural rubber is only 720,000 tons, about 2.7 million tons imported from abroad.

As a result, pressure is growing in China to control the price of NR. China's tyre companies are increasingly becoming involved in the rubber trade and are now being encouraged to build their own stocks with the aim of stabilising prices over the mid-term.

One option is for tyre companies to acquire plantation companies in south-East Asia and to gain control of smallholder output, said the report

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News story from CRIA (Chinese language)

Above story auto-translated (from Chinese language)