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Five factors boost Chinese demand for natural rubber

Chinese natural rubber consumption has increased sharply in the past few months. Shen Jinrong, president of ZC Rubber, concluded five reasons for the sharp increase at the latest annual forum of the rubber industry.

First, demand for truck tires rose sharply.

China’s truck sales grew 30 percent in 2016, with most of the increase occurring after the third quarter.

January 2017 saw truck sales surge 122 percent from January 2016, and February saw an increase of 152 percent. The increase of March is expected to stay above 100 percent.

Second, the replacing tire market rose more than 20 percent.

As the commodity price rose quickly, tire dealers and major consumers bought morereplacing tires fearing the prices would go up further.

During the past few months, sales of replacing tires rose about 20 percentmonthly.

Third, export of all-steel tires rose generally.

Although the U.S. launched anti-dumping and anti-subsidy investigations on Chinese tires, our export of all-steel tires to the U.S. rose during two periods last year.

One is the period from the beginning of the investigations to the release of the preliminary rulings. The other is the period from the expiry of the preliminary rulings to the release of the final rulings.

Fourth, the manufacturers adjusted raw material structure and used more natural rubber to replace compound rubber.

As the butadiene was in short supply, the compound rubber price became higher than the natural rubber price.

Fifth, the rapid expansion of public bicycles in many of Chinese cities suddenly boosted the demand for bicycle tires.

Shen estimated that the five factors increased the consumption of natural rubber by 50,000 tons, 200,000 tons, 30,000 tons, 300,000 tons and several thousand tons respectively in the past half year, with the total increase up to about 600,000 tons.

China consumes nearly 50 percent of the world's natural rubber. In China's natural rubber consumption, tires account for about 70 percent.

With the sharp increase of tire demand, China’s influence on the global natural rubber market cannot be ignored, Shen underlined.