1. Tariff hike on natural rubber imports

Starting from January 1, 2015, the temporary import tariff rate of natural rubber in China has been adjusted from 20% or 1200 yuan/ton to 20% or 1500 yuan/ton, with an increase of 300 yuan/ton; The temporary tax rate for imported natural rubber latex will be adjusted from 10% or 720 yuan/ton to 10% or 900 yuan/ton, with an increase of 180 yuan/ton. Based on the estimated import volume of natural rubber for general trade in 2013 of approximately 350000 tons, rubber consuming enterprises will incur an annual cost increase of 105 million yuan. However, due to the increase in import tariffs, rubber companies such as tires may import more natural rubber for processing and trade, resulting in higher dependence on exports. The result is that it is easy to cause more trade friction, and the second is that it will continuously suppress domestic rubber companies from being at the bottom of the manufacturing chain.

 

2. National standard for reducing raw rubber content in composite rubber

On August 22, the National Standardization Administration Commission released the General technology Specification for Composite Rubber (Draft for Comments), which stipulates that the content of raw rubber in composite rubber is not more than 88% (mass fraction), which is far from the 95% - 99.5% natural rubber content specified in the Self discipline Specification for Composite Rubber formulated by the China Rubber Industry Association in 2006. It is understood that if this standard is officially implemented, it means that the door to the import of composite rubber will be closed. If all composite rubber is converted into general trade natural rubber imports, calculated based on an annual import of 1.5 million tons of natural rubber, rubber consuming enterprises will need to incur an additional cost of 2.25 billion yuan. At the same time, it will also force rubber companies such as tires to import more processing and trade natural rubber, which can easily lead to new trade frictions and make it difficult for enterprises to get rid of the situation of being at the bottom of the manufacturing chain.

 

3. Introduction of the "Entry Conditions for the Tire Industry"

On September 17th, the Ministry of Industry and Information Technology officially introduced the "Entry Conditions for the Tire Industry" and implemented it from October 1st. The 'Conditions' emphasizes energy conservation and environmental protection, and puts forward hard indicators such as energy consumption, resource consumption, and pollutant emissions for tire enterprises; Encourage the development of energy-saving, environmentally friendly, and safe green tires; Encourage the adoption of independent intellectual property technology in new, renovated, and expanded tire projects; It is stipulated that the quality of tire products must comply with relevant standards, etc. At present, the Ministry of Industry and Information Technology is formulating announcement management measures for admission conditions and will implement announcement management for tire enterprises. The release of this policy will play a good role in promoting the elimination of outdated production capacity and regulating the development of the tire industry.

 

4. China Rubber Association releases the "Technical Specification for Green Tires"

On February 24th, the China Rubber Industry Association released the "Green Tire Technical Specification" and began trial implementation on March 1st. This is the first self regulatory standard for the green tire industry in China. This standard standardizes the definition of green tires, proposes performance requirements for green tire products, raw material usage requirements, and recommends green tire production processes and technologies. The 'Regulations' laid the foundation for China's next step in implementing a tire labeling system. In order to promote the industrialization of green tires, the China Rubber Association has established the "Green Tire Industrialization Promotion Committee" and the "Green Tire Technical Support Center", and will authenticate tire testing institutions, refine green tire raw material guidelines, and ultimately achieve tire labeling system.

 

5. The industry has entered the speed of development, shifting back to the "New Normal"

In 2014, the basic trend of the development of China's rubber industry was: continuous increase in production and continuous decrease in sales prices; The increase in export quantity leads to a decrease in the increase in export delivery value; The price of rubber raw materials continues to be low, and factor costs continue to rise; Profit growth, but the growth rate continues to decline. The whole industry has entered the "New Normal" of speed shifting and falling back, from the high-speed growth of about 20% in the past to the single digit growth of less than 5% for three consecutive years. According to statistics from the China Rubber Industry Association, in the first three quarters, the industry achieved a year-on-year increase of 3.67% in current industrial output value, a year-on-year decrease of 0.18% in sales revenue, a year-on-year increase of 1.39% in export delivery value, and a year-on-year decrease of 0.64 percentage points in export rate (value). Some problems that were masked during the period of high-speed growth were concentrated and exposed, such as structural overcapacity and severe product homogenization. At the same time, under the "New Normal", the industry will also accelerate structural adjustment, innovation driven and green development.

 

6. The "Research on the Development Strategy of China's Rubber Industry Strong Country" was officially released

On October 16th, the China Rubber Industry Association officially released the "Research on the Development Strategy of China's Strong Rubber Industry". The book is comprehensive and rich in content, using authoritative and detailed data to systematically summarize the achievements of the rubber industry in the early stages of the 11th and 12th Five Year Plans. With the goal of achieving advanced technological level in the contemporary rubber industry and comparing it with international advanced technology, it proposes strategic goals and measures for the development of a strong rubber industry in China in the next 5-10 years. This book specifically quantifies the strategic goals of becoming a strong country for the first time, and draws a roadmap for the rubber industry to become a strong country. It serves as a compass for China to move towards becoming a world rubber industry powerhouse and will effectively promote the construction of China's rubber industry powerhouse.

 

7. Delayed investment in tire companies and project delays

Under the slowdown in demand growth in domestic and international markets, the continuous decline in raw material and product prices, and the pressure of the United States' "double anti tire" campaign against China, the business difficulty of the tire industry has significantly increased in the second half of the year. The exports of the products involved in the "double anti" campaign to the United States have decreased month by month, and the industry's operating rate is generally not high. Most enterprises are between 70% and 80%, and inventory pressure has increased, causing the first slowdown in investment in tire projects that have been popular in recent years, Some projects have been suspended or terminated. This situation also affects equipment suppliers, with a large amount of equipment backlog in their hands, and rubber machinery enterprises saw a significant decrease in orders in 2015. In addition, due to market and inventory pressures, as well as the expectation of continuous decline in tire prices, the tire marketing industry has entered a difficult year. In this environment, domestic tire companies are accelerating their pace of going global, and companies such as Linglong, Zhongce, and Sailun have all accelerated the construction progress of Southeast Asian projects.

 

8. Promoting informatization and environmental protection and energy conservation as the direction

Due to the increasingly strict environmental requirements of the country and the continuous increase in the cost of basic elements in China, enterprises in the rubber and related supporting industries have increased the development of safety and environmental protection process equipment, as well as automation and information technology transformation. For example, the waste rubber comprehensive utilization industry has been actively promoting the green upgrading of rubber powder and reclaimed rubber production processes, equipment and raw materials, and has determined three major goals of eliminating "small three pieces" and coal tar, and changing the desulfurization mode, while actively promoting the formulation of clean production and green production standards. Industries such as rubber additives, skeleton materials, and power tires are also actively promoting automation upgrading and information technology transformation. For example, rubber additive production enterprises have initiated closed continuous production process transformation and central control automation.

 

9. Rubber prices continue to decline

2014 was a difficult year for natural rubber production and traders. Natural rubber is in a global situation of oversupply, with prices continuing to remain low, falling back to the level of the 2008 international financial crisis, causing losses for production enterprises and traders. The production capacity of synthetic rubber is also significantly higher than actual demand. The utilization rates of butadiene styrene rubber and cis-1,4-polybutadiene rubber units have decreased to 53% and 68% respectively, and the utilization rate of isoprene rubber has also decreased to 15%. Synthetic rubber enterprises have encountered difficulties in production and operation. In the next two years, China will have a new production capacity of one million tons of synthetic rubber.