More measures can be taken to stabilize the price of glue

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In the past two years, due to the continuous low price of natural rubber, the domestic production of natural rubber is very difficult. Some people mentioned the import of composite rubber and the import tariff of natural rubber when analyzing the reasons, hoping that the state macro-control the price of rubber. In fact, the price of natural rubber has fluctuated greatly in recent years, which has caused serious harm to the upstream and downstream. Therefore, the industry is more urgent to stabilize the price of rubber and achieve healthy and sustainable development. And stable price, government and industry can be in many ways.

In the past two years, due to the continuous low price of natural rubber, the domestic production of natural rubber is very difficult. Some people mentioned the import of composite rubber and the import tariff of natural rubber when analyzing the reasons, hoping that the state macro-control the price of rubber. In fact, the price of natural rubber has fluctuated greatly in recent years, which has caused serious harm to the upstream and downstream. Therefore, the industry is more urgent to stabilize the price of rubber and achieve healthy and sustainable development. And stable price, government and industry can be in many ways.
Factors that affect prices and inventories
Insiders believe that the price of natural rubber is low, the inventory is high, and the import of composite rubber is more, mainly for the following reasons:
First, the global natural rubber supply and demand relationship changes. In 2013, the global production of natural rubber was about 12 million tons, the demand was between 11.3 million and 11.5 million tons, and the supply was several hundred thousand tons, which caused the market supply to exceed demand.                                                                
Second, the expansion of China's synthetic rubber production capacity, and the formation of natural rubber mutually alternative relationship. In recent years, due to the increasing demand for natural rubber in China, the import dependence reached about 80%. Before 2012, the price went up year by year and even exceeded 40,000 yuan/ton, which stimulated the rapid development of the synthetic rubber industry. The output of synthetic rubber in China increased rapidly from 2 million tons in 2008 to 4.98 million tons in 2013. And about 20% of natural rubber and synthetic rubber can be replaced with each other, and the price relationship is also very sensitive. It is not only a factor to increase the amount of natural rubber, but also a major reason to inhibit the amount of natural rubber.
Third, the price guidance function of futures market. As we all know, now the world's natural rubber to see China, China's natural rubber to see Shanghai, Shanghai Futures Exchange natural rubber daily turnover is dozens of times the volume of all other exchanges in the world. The main driver of futures prices is financial capital. The sharp fluctuation of natural rubber price in recent years has decoupled from the fundamentals, and the spot market price has become strongly correlated with the futures price, which is closely related to the domestic and foreign capital speculation, and the domestic and foreign economic trend and financial situation. Among them, the natural rubber trading varieties and rules of the previous period is also an extremely important factor.
Fourth, the financial property of rubber exceeds its agricultural property. In recent years, financial capital has fully entered the field of rubber trade, and in the past two years, rubber inventory has been pushed up by financing arbitrage import behavior. The profit point of this operation is not on the bid-ask spread of rubber, but on rubber as the carrier to obtain financing, to earn interest rate spread at home and abroad. For example, in 2013, the domestic monetary and financial markets were once trapped in a "money shortage". The cost of foreign dollar financing was 2% ~ 4%, while the cost of domestic RMB financing even exceeded 10%. Under the background of domestic capital shortage and the widening of interest rate spread at home and abroad, it provided the positive exchange yield of arbitrage operation and boosted the financing trade operation.                     
Fifth, the high tariff leads to the import of composite glue. If natural rubber imports are subject to normal tariffs, rubber companies cannot bear the pressure of high tariffs. For example, in 2011, when the price of natural rubber was high, China imported 2.1 million tons of natural rubber, the import amount was 938.895 million dollars, the average import price was 4,467 dollars/ton, and the AD valorem tax was as high as 5610 yuan/ton. The enterprises could not digest it at all, resulting in a large area of losses. Even though the price of natural rubber was low in 2013, China imported 2.48 million tons of natural rubber, with the import amount of 639,6258 million US dollars, and the average import price was 2,579 US dollars/ton. Calculated by 20% AD valorem tax, the tariff also reached 3,218.6 yuan/ton. It is because the normal import tariff is too high, forcing enterprises to import zero tariff compound glue.
Sixth, composite rubber import tariff and natural rubber prices have nothing to do. Zero tariff on compound glue has been implemented for many years as part of the reciprocal terms of trade between China and ASEAN. In 2009, the composite rubber tariff from 5% to 0, did not impact the price of natural rubber in China. On December 30, 2008, the price of natural rubber was 10,670 yuan/ton, and on February 14, 2011, the price was as high as 42,860 yuan/ton. The implementation of zero tariff for two years, the domestic rubber price has gone up all the way, it can be seen that the price of rubber is not determined by the import tariff of composite rubber.
High tariffs are out of line with national conditions
As a very limited strategic material in suitable species areas, only China and India impose import tariffs on natural rubber in the world, while the United States, Japan, Europe and other developed countries with rubber tire industry do not have natural rubber tariffs. India's annual output of natural rubber is about 900,000 tons, which is basically self-sufficient. It imports natural rubber every year as a small amount of supplement. Therefore, import tariffs are set up to protect the domestic natural rubber industry. Even so, India's imposition of import duties on natural rubber has hurt its own tyre industry. India, with a much better tyre industry base than China (a former British colony that opened to the outside world much earlier), was once Asia's second largest tyre producer and exporter after Japan, but has now become a tyre importer. Due to import duties on rubber, India's local tyre industry has been constrained, with tyres from China, Thailand, South Korea, Japan and other countries entering the Indian market in large numbers.
However, about 80% of our natural rubber relies on imports. Domestic natural rubber is far from being able to meet the needs in output, and the gap in quality and varieties is larger. Moreover, in the past few years when the price of natural rubber was high, a large number of tropical rain forest crops were felled to plant rubber trees in southern Yunnan and other areas, and governments at all levels were doing everything possible to crack down on local deforestation. China's natural rubber production capacity had no possibility to increase significantly, so it could not blindly refer to India to set high tariffs.
Natural rubber is an important strategic material. It can only be grown in tropical and rainy regions. The potential for global production growth is very limited, while demand in China and the global market is increasing. The country should also actively encourage imports out of consideration for the limited ecological protection of tropical rainforests at home.
In addition, the high tariff policy of natural rubber has brought many drawbacks to the development of domestic tire industry. First, tire enterprises are forced to import a large number of zero-tariff processing trade rubber, resulting in a high degree of dependence on the international market, which is not conducive to shaping the brand of enterprises in the domestic market, but also makes the industry always face the pressure of international trade friction, which is not conducive to the long-term healthy development of the tire industry. Second, tire enterprises are difficult to change the marketing strategy in time according to the changes in the market situation, so that enterprises are difficult to maximize the benefit. For example, when the domestic market situation is good and the price is high, the enterprise has only one way to export the product because it imports natural rubber for processing trade, and cannot timely market conversion. Multinational tire enterprises are global procurement, global distribution, and few domestic tire enterprises go abroad. In recent years, the domestic automobile market has become the biggest highlight of the global economic growth, but the domestic tire enterprises are difficult to share the benefits. Third, it encourages illegal activities such as natural rubber smuggling.
The existing standard of composite adhesive should not be changed
It is understood that some people have proposed to reduce the content of natural rubber in composite rubber by referring to the origin standard of goods enjoying zero tariff in Hong Kong and Macao, China. Industry insiders believe that this will seriously damage the market competitiveness of domestic tire and other rubber enterprises. There is no tire industry in Hong Kong, Macao, China, so the standard of composite rubber has no practical significance for them, and does not have the value of reference.
There is no international standard for composite adhesives. In order to standardize the composite adhesives market and ensure the quality of composite adhesives imported by rubber enterprises, China Rubber Industry Association formulated the self-regulation of composite adhesives in 2006, which has been confirmed by the Ministry of Commerce and other relevant departments. At the same time, through the dialogue and communication with the governments and associations of glue producing countries, it has also been recognized by the governments and associations of glue producing countries and processing enterprises. If the proportion of natural rubber in composite rubber is reduced, the quality of composite rubber is not guaranteed, it will not only affect the safety performance of tire products, but also seriously affect the use of domestic enterprises and foreign rubber supply, causing great confusion in the market.
If the natural rubber content of composite rubber is greatly reduced, not to mention whether it is also in line with the process requirements of rubber products enterprises, in terms of rubber mixing, it is necessary to add large rubber mixing equipment, equivalent to the Chinese tire enterprises 1/3 of the processing process moved to Southeast Asia, not only in technology is not feasible, and Southeast Asia does not have the ability, In fact, it is equal to close the door of composite glue import. It is understood that last year, China imported 1.54 million tons of composite rubber. If China closes the door of composite rubber import, then the global natural rubber market will be more surplus, because China's natural rubber consumption accounts for more than 1/3 of the world. At that time, the price of natural rubber will drop significantly, several years ago, once dropped below $1000 / ton, thus dragging down the global price of natural rubber.
Suggestions to stabilize the price of natural rubber
The price of natural rubber is too high and too low, will seriously damage the common interests of upstream and downstream enterprises. Therefore, the China Rubber Industry Association and domestic tire and other rubber products companies have been calling for the stability of natural rubber prices. In terms of price stabilization, relevant departments and industries can do a lot:
First, actively encourage domestic natural rubber producing areas to turn over the old rubber forest in advance. Gum trees generally have a life span of 30 years, and the yield per unit area will decline in the later period. When the price is low, governments in Southeast Asia encourage gum farmers to plant in advance. For example, the Thai government gives glue farmers 26,000 baht (about 5200 yuan) per rai (about 2.4 mu) for planting subsidies.
Second, subsidies are given to small and medium-sized glue farmers. Last year, the government offered 2,520 baht for each rai tree and up to 20 rai for each farmer, as well as subsidies for those who did not cut gum for other jobs.
Third, the state to increase the natural rubber storage. China has been the world's first tire production country and rubber consumption country, import dependence has reached 80%, in this case, the country should increase the natural rubber reserves, establish and improve the national natural rubber resources adjustment mechanism, so that the national reserve rubber effectively buy when the rubber price is too low, stabilize the price, consolidate and develop the natural rubber production base; When the rubber price is too high, it can be sold to calm the market price, prevent and control inflation, reduce the raw material cost of rubber processing enterprises, ensure the normal operation of enterprises, and give full play to the role of the state reserve and its due action.
Fourth, establish a commercial purchase and storage mechanism. As long as there is a small amount of state finance and bank loan support, domestic large tire enterprises, rubber trade enterprises will be involved, and the reserves will not be small, because rubber is easy to save, and a long shelf life.
Fifth, the establishment of natural rubber stabilization fund. On the one hand can play the role of leverage futures, on the other hand can also operate spot. The China Rubber Industry Association has been actively organizing domestic large tire companies to operate the stabilization fund, but since it is a new thing, it hopes that the government finance and banks will provide support.
Sixth, we will encourage domestic enterprises to go global. The country should give more preferential policies to enterprises investing in foreign countries. While encouraging enterprises to go out, it should also "flow back" the resources. When overseas rubber resources are sold back to China, it should give duty-free or VAT reduction in the import link, or adopt the way of levy and fall back first, so as to ensure that domestic enterprises going out enjoy equal market treatment with foreign enterprises. Alleviate the situation of shortage of natural rubber resources.


Natural rubber