The China Rubber Industry Association (CRIA) balks at the new standards set by the Chinese government for the import of rubber compound compositions.
The new standard redefines compounded rubber with a maximum of 88% crude rubber in its composition as opposed to the current regulations which allow 95-99.5% crude rubber constitution.
The new regulation for rubber import is slated to take effect on 1 Jan amid calls for its delay by ASEAN suppliers.
According to CRIA, to custom-make 88% materials require large-scale internal mixers and the ASEAN suppliers currently lack capacity to provide such custom-made materials in bulk.
Most of China’s consumption of compounded rubber and standard rubber is imported from ASEAN countries. As no tariff is placed on these imports, the compounded rubber is often chosen as a substitute for standard rubber by China’s tyre makers.
According to Chinese media, currently many tyre makers use compounded rubber as a substitute for standard rubber. The 95%-or-above crude rubber constitution makes such substitution possible, and it costs much less — there is a 1,200 yuan/tonne tariff on standard rubber.
With the new regulation, materials with 95%-or-above crude rubber constitution will no longer have zero tariff, as they no longer fall into the category of compounded rubber.
Tyre makers are, therefore, likely to either switch to more costly standard rubber, or have the 88% materials custom made, otherwise they can’t be used as substitutes for standard rubber. The latter move would, however, also involve extra costs.
Analysts expect an increase in compounded rubber imports to China before the new regulation comes into force.
Thailand expressed its concerns over the move, saying with the new standards, Thai rubber makers could stand to lose their share in the Chinese market.
Earlier in November, the Thai Agriculture and Cooperatives Minister, Pitipong Puengboon na Ayutthaya urged China to consider deferring the enforcement of the new regulation for another year.