Henan, China – After more than 20 percent rise in production volume, export volume and production value for China's rubber additives during last year's first three quarters, the prices took a significant downturn in Q4 2014, with a drop as much as 35 percent for some varieties according to Wang Zhiqiang, general manager of Willing Chemicals.
Willing is one of China's largest rubber additives makers based in Puyang, Henan Province, producing 40 varieties with 30kt/year total capacity.
Despite local reports casting doubt on the sector's prospects, Wang is optimistic that the business would remain profitable.
"I think we need to consider the fact that the prices have been rising for a long time, and the current price still leaves room for profit," he said.
China's planned new regulation on compounded rubber, which has been postponed to come into force on 1 Jul. 2015, will cause the cost for rubber products to jump due to a rise in tariffs, also have partly contributed to the price drop.
"Additives makers that sell mostly to domestic tire companies and the likes will be more severely affected. Domestic rubber products manufacturers will lose competitive edge in the global market when the cost goes up, hence there will be a fall in demand for additives," warned Wang.
"However, a lot of companies in the sector have a large export volume – about 60 percent of Willing's additives goes to overseas clients – so we are not as worried," he added.