China’s reclaimed rubber industry is expected to receive policy incentives that the industry has been awaiting for years.
The incentive package will include favorable added-value tax policies to be jointly released by the Ministry of Finance and the State Administration of Taxation, sources disclosed at a recent industry forum held in Suqian, east China’s Jiangsuprovince.
-- Expected to be unveiled by yearend
Sources familiar with the issue disclosed that the policy incentive will be unveiled by the end of 2014 if everything goes well.
Under the scheme, an enterprise that uses 100% reclaimed rubber as raw materials, meets corresponding national and industrial standards in technology and waste discharge, passes ISO9000 and ISO14000 review, and owns a B-class or plus credit rating, will be eligible to enjoy a 50% cut in added value taxation, with a ceiling of 50 million yuan every year.
Zhu Jun, head of China Tire Retreading, Repairing and Recycling Association (CTRA), noted that that the access threshold is not hard to meet. However, reclaimed rubber enterprises shall continue to increase inputs into environment protection if they are to consolidate their market status.
-- Reclaimed rubber: a major player in rubber industry
China is a top rubber consumer around the globe. Every year, natural rubber and synthetic rubber imports account for more than 70 percent and 40 percent of the country’s total rubber consumption, respectively.
At present, application of reclaimed rubber represented around 30 percent of rubber consumption in China, making the material the third largest rubber source for the country.
It’s estimated that every 3 tonnes of tire reclaimed rubber could replace 1 tonne of natural rubber, and every 2 tonnes of tire reclaimed rubber could replace 1 tonne of synthetic rubber.
In 2012, China’s reclaimed rubber output totaled 3.5 million tonnes, equivalent to offering the rubber industry some 1.1 million tones of natural rubber.
-- Overcapacity: capacity utilization less than 60%
There’s one thing in the reclaimed rubber industry that should not be neglected -- overcapacity.
It’s estimated that China has more than 1,000 enterprises engaged in various kinds of reclaimed rubber business, with a combined output capacity of more than 6 million tonnes. Their capacity utilization rate was less than 60 percent, while the more reasonable range should be 80-85 percent, based on common practice in the international market.
“Severe overcapacity has led to vicious competition among the market players, featured by falling prices, heavy debts, and increasingly shrinking profit margin, said Li Rulin, deputy head with the CTRA.
Noticing the problem, the Ministry of Industry and Information Technology published in July 2012 stricter access rules for the scrap tire utilization industry.
According to the rules, an existing waste tire processing enterprise shall have an annual processing capacity of no less than 10,000 tonnes. As for new or renovated firms, a qualified firm shall have an annual processing capacity of no less than 20,000 tonnes.
Li noted that nearly 90 percent of domestic scrap tire processors fail to meet the requirement of 10,000 tonnes of processing capacity.
In May 2014, the MIIT unveiled the list of the first batch of tire retreading and scrap tire utilization firms.
The list comprises 23 enterprises in 11 provinces or municipalities that have met the requirement of the access criteria for the tire retreading industry or the comprehensive utilization business of scrap tires.
(Edited by Olivia, olivia@tireworld.com.cn)
