Fear of Fall in China Zinc Oxide Consumption Overdone, SMM Sees

 

China is due to implement new standards for compound rubber on July 1, 2015, but market players speculate that the standards might be carried out later than scheduled. 

 

Production costs for tire producers, driver of over half of zinc oxide demand, will rise about 10% after new standards take effect. This could potentially discourage tire producers from production, thereby hurting zinc oxide consumption. Domestic tire industry has long been bitten by overcapacity, weak demand and depressed prices. 

 

Under the new standards, compound rubber with natural rubber content in excess of 88% will be subject to import duty of 1,500 ($ 242) per tonne. Compound rubber commonly used China contain 97% and 99% of natural rubber. Over half of the compound rubber that China’s tire industry consumes annually – about 1.6 million tonne – relies on imports.