Beijing – Changes to China’s import tariff for compound natural rubber went into force on 1 July, six months after the original date, sending shockwaves across both the rubber market and the tire & rubber manufacturing sector in the country.
The new standard redefines tariff-free compound rubber with a maximum of 88 percent crude rubber in its composition. Previously compounds containing 95-99.5 percent of rubber were tariff-free in China.
The price of natural rubber on Shanghai Futures Exchange (SHFE) rose 2.6-percent on the same day, with local analysts forecasting further short-term price rises.
Despite the sharp price rise, the news is not good for ASEAN rubber producers as they will have to adapt their compounding formulations.
According to the China Rubber Industry Association (CRIA), to custom-make 88-percent materials requires 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”.
And the decision was not good news for the tire industry in China either, as it will likely impact the competitiveness of the growing business.