RCEP signing will benefit upstream and downstream companies of carbon black

The signing of RCEP will benefit trade in energy commodities:

Recently, the Fourth Regional Comprehensive Economic Partnership Agreement (RCEP) was officially signed after eight years of long negotiations.

According to statistics, in the first three quarters of this year, China’s total natural gas supply was 241.

Through the signing of RCEP, China, Japan, Japan and South Korea are expected to establish a new free trade partnership, and the degree of free trade within the region will be further enhanced

It is understood that light cycle oil (LCO) is a 100% imported variety, mainly used as a regulating component of diesel

At present, China's imports of base oil from East Asian countries also have varying degrees of tariffs, and imports from South Korea and Singapore account for 70% of the total imports

If tariffs between countries in the region are reduced or eliminated, it will bring certain cost advantages to the import of asphalt

It is understood that China’s petroleum coke currently imports more needle coke, mainly because some of the high-end technology of needle coke is currently lacking in China, and the largest source of imports is South Korea

Signing of the world’s largest free trade zone is positive for the tire industry:

On November 15, the Regional Comprehensive Economic Partnership Agreement (RCEP) was formally signed during the East Asian Cooperation Leaders’ Meeting

The RCEP agreement is officially signed and rubber tariffs are expected to be lowered:

On November 15, 2020, the "Regional Comprehensive Economic Partnership Agreement" (hereinafter referred to as "RCEP") was formally signed under the organization of the 2020 ASEAN chairmanship of Vietnam

1.

It is understood that the "Regional Comprehensive Economic Partnership Agreement" (RCEP) negotiations were initiated by 10 ASEAN countries (Indonesia, Malaysia, Philippines, Thailand, Singapore, Brunei, Cambodia, Laos, Myanmar and Vietnam) in 2012 and in 2013 The first round of negotiations was launched in May, and six countries including China, Japan, South Korea, Australia, New Zealand, and India were invited to participate.

According to statistics, the output of natural rubber in the Asia-Pacific region accounts for about 91% of the global output.

According to the data provided by the Association of Natural Rubber Producing Countries (ANRPC), Thailand, Indonesia, and Vietnam are the top three exporters of natural rubber in the world; China and India are the main importers of natural rubber; Malaysia is both an importer of natural rubber and natural rubber.

It is worth mentioning that China is the world's largest importer of natural rubber, and its import dependence is as high as about 85%.

Therefore, the official signing of the RCEP agreement is conducive to the healthy and rapid development of the natural rubber industry.

2.

Before 2004, China's natural rubber imports had a quota, and the preferential tariff within the quota was 2%
.
In 2004, China abolished the natural rubber tariff quota system, and the import tax rate of smoked sheet rubber and standard rubber was increased from 12% to 20%
.
At the beginning of 2007, the tariffs of the two were adjusted to 20% or 2600 yuan/ton from the lower choice tax system
.
On December 25, 2018, China issued the "2019 Temporary Import and Export Tariff Adjustment Plan", which will adjust the import and export tariffs of some commodities from January 1, 2019.
Raw materials such as natural rubber and synthetic rubber will be adjusted.
Import tariffs in some countries continue to be reduced, and import tariffs on some large-size tires have been significantly reduced
.
According to the "Notice of the Customs Tariff Commission of the State Council on the 2020 Import Tentative Tariffs and Other Adjustment Plans", China's natural rubber import tariffs in 2020 will continue to extend the 2019 tariffs
.
The tax rate is as follows: The 2020 provisional tax rate of 40011000 natural latex is 10% or 900 yuan/ton, whichever is lower
.
The provisional tax rate of 40012100 natural rubber smoke film is 20% or 1500 yuan/ton, whichever is lower
.
40012200 Technical Classification Natural Rubber (TSNR) has a 2020 provisional tax rate of 20% or 1,500 yuan/ton, whichever is lower
.
The most-favored-nation tax rate for 2020 is all 20%
.

Although the Chinese tire industry and the China Rubber Industry Association have been calling for the reduction of natural rubber import tariffs, China currently imposes relatively high tariffs on natural rubber imports (see Figure 3)
.
Investors are advised to pay close attention to whether the import tariff of China's natural rubber in 2021 will continue the 2019 tariff rate or will the import tariff rate be lowered accordingly? I tend to think that the latter has a higher probability
.
Three, mixed glue compound glue or will withdraw from the stage of history

In fact, "composite rubber" and "mixed rubber" are varieties with Chinese characteristics, mainly to avoid the high import tariffs of natural rubber.
After all, mixed rubber and composite rubber are subject to the tariff rate of the ASEAN Agreement (with certificate of origin).
All are zero
.

From the perspective of the composition of "composite rubber" and "hybrid rubber", both are excellent substitutes for natural rubber, and due to the adjustment of domestic trade policies, the two are showing a trend of ebb and flow
.
In the past, China’s tariff for importing composite rubber from ASEAN countries was 5%, and the tariff for importing composite rubber from non-ASEAN countries was 8%
.
In 2009, China reduced taxes to various ASEAN countries.
Except for Vietnam, which maintained 5%, the agreed tax rates of other ASEAN countries such as Thailand, Indonesia, and Malaysia dropped from 5% to 0%
.
After the implementation of zero tariffs, China's imports of composite rubber have increased significantly
.

However, the good times are not long.
On July 1, 2015, the "General Technical Specifications for Composite Rubber" was formally implemented.
The main requirement is that the content of raw rubber in composite rubber should not exceed 88% (mass fraction)
.
China's imports of composite rubber have shrunk sharply, and China's composite rubber has replaced it
.
According to statistics from the General Administration of Customs of China, from 2015 to 2018, China's imports of mixed rubber were 535,800 tons, 1.
8198 million tons, 2,751,900 tons, and 2,951,100 tons, with year-on-year growth rates of 729.
66%, 239.
63%, 51.
22%, and 7.
20%.
, And the annual import volume before 2009 was far less than 10,000 tons, and the annual import volume from 2009 to 2014 was less than 80,000 tons
.

Of course, in response to the surge in China's imports of mixed rubber since August 2015, on August 4, 2016, the China Natural Rubber Association and the China Synthetic Rubber Industry Association jointly issued the "General Technical Self-Regulations for Mixed Rubber".
Of course, this standard is only for the industry.
Self-discipline standards are not substantively binding
.
On April 28, 2019, the Customs Administration Department of the General Administration of Customs of the People's Republic of China issued a notice on clarifying the classification and identification of "mixed rubber" under tariff number 40028000
.
China Customs adjusted the standards for identifying the import of mixed rubber, which resulted in a significant shrinkage of mixed rubber imports
.
Statistics from the General Administration of Customs of China show that China's imports of mixed rubber in 2019 amounted to 2,660,400 tons, a year-on-year decrease of 9.
82%
.
However, in the first three quarters of 2020, China's mixed rubber imports have risen again, with a cumulative import volume of approximately 2,664,900 tons, which has surpassed last year's import volume, with a cumulative year-on-year increase of 47.
23% (see Figure 6)
.

Although the natural rubber market has suffered the impact of the new crown pneumonia epidemic this year, the zero-tariff blended rubber has shined in China's rubber imports in the first three quarters of 2020, far exceeding the import performance of natural latex (the cumulative year-on-year increase is only 0.
16%).
Other types of rubber have declined to varying degrees, especially the cumulative volume of standard rubber imports fell by 24.
82% year-on-year
.

If the "Regional Comprehensive Economic Partnership Agreement" (RCEP) is gradually implemented, will it be possible to realize the long-term wish of China’s tire industry and China Rubber Industry Association to "remove natural rubber import tariffs", and then China’s unique mixed rubber will also After experiencing brilliance with compound glue, it will gradually withdraw from the stage of history! After all, in the same environment with zero tariffs, the quality of mixed rubber composite rubber is completely uncompetitive compared with standard rubber!

In summary, the "Regional Comprehensive Economic Partnership Agreement" (RCEP) has been officially signed, and the next question is how to implement it
.
If China lowers import tariffs on natural rubber in 2021, it will have a certain impact on China's domestic natural rubber industry in the short term, especially the high spot price of domestic latex, but in the medium and long term, it will be beneficial to correct domestic and foreign similar products.
Due to the unusually low price of rubber, domestic rubber has regained the favor of downstream customers
.

It is worth mentioning that as China's natural rubber tariffs gradually drop to zero, the inferior and high-priced "hybrid rubber" that exists to avoid high tariffs will gradually withdraw from the stage of history like "composite rubber"
.