US tire tariffs trigger butadiene exports from
China
Tokyo (Platts)--17Sep2009/235 am EDT/635 GMT
The US government's decision to impose tariffs on China-made tires
has led China, typically a butadiene importer, to export butadiene
as domestic tire producers were starting to slash operating rates at
their plants, industry sources said Thursday.
"China's industry was shocked by the tariff announcement,"
said a China-based synthetic rubber producer, adding that synthetic
rubber orders from tire producers dropped sharply after the
announcement. "One of the customers, who exports around 70% of its
total tire output to the US, decided to postpone its synthetic
rubber orders from us, as it decided to slash plant operations," he
said. The lower plant runs resulted in excess supplies of butadiene,
a key feedstock for rubber production.
It is very rare that China exports butadiene as it is one
of the largest butadiene importers in Asia, but now China is
actively moving the excess butadiene supplies out of the country.
China has been importing 20,000-30,000 mt/month of
butadiene so far in 2009, according to China's customs department.
However, market sources said around 4 cargoes, or around
6,000 mt of butadiene has already been fixed for export for October
loading from China. Around one or two cargoes are currently under
negotiation for export, one of the sources added.
The excess supplies are adding pressure to the Asian
butadiene market. The CFR China price benchmark has dropped around
$30/mt from last Friday to $1,710/mt Thursday.
China's tire industry heavily relies on exports, especially
to the US. Around 45% of China's total tire production is exported
and the US accounts for around half of those exports, said the
synthetic rubber producer.
Last Friday, US President Barack Obama approved new tariffs
of 25-35% on all car and light truck tires imported from China. In
the first year, a 35% tariff will be imposed, declining to 30% in
the second year and 25% in the third, the White House said in a
statement late Friday. The duty will take affect 15 days from the
announcement.
China's tire association is also stepping in to protect its
export-oriented industry. According to a local report Wednesday, the
Chinese Rubber Industry Association has submitted seven proposals to
the Ministry of Commerce and Ministry of Industry and Information
Technology, urging the government to increase tax rebates, reduce
export tariffs and to buy more domestically made tires to offset the
negative effect of the tariffs.
The Chinese government also filed a formal complaint to the
World Trade Organization Monday, over the tariffs. --Fumiko Dobashi,
fumiko_dobashi@platts.com
