Malaysia's natural rubber imports will likely rise 24%-34% this year, fueled by strong exports of compound rubber to China, Minister for Plantation Industries and Commodities Bernard G. Dompok told Dow Jones Newswires.
Imports this year are expected to be 650,000 metric tons to 700,000 tons, Dompok said in an interview. Malaysia imported 523,000 tons of natural rubber in 2008.
On the demand side, Malaysian compound rubber exports have already surpassed 300,000 tons in the January-September period, most of it to China. That was 56% more than the 192,000 tons exported in the whole of 2008.
Dompok said Malaysian companies are importing natural rubber and processing it into compound rubber for exports. Around 95% of Malaysia's compound rubber exports are to China.
Compound rubber is a mix of natural and synthetic rubber, giving the end product greater durability, but usually around 99% of the content is natural rubber.
According to analysts, the import duty structure in China is one of the factors driving Malaysia's compound rubber exports. China imposes a 5% import duty on compound rubber while the duty on natural rubber is 20%.
Due to a surge in shipments, Malaysia recently imposed a research and development tax of 4.0 sen/kg on compound rubber exports. The tax was earlier applicable only to exports of natural rubber that was domestically produced.
The surge in compound rubber exports and fall in domestic production has led to the sudden increase in imports this year. Most of the imported rubber is of "low grade and needs to be processed before exporting it," said Dompok. Malaysia mainly imports TSR category natural rubber from Indonesia, India and Sri Lanka.
Malaysia's own natural rubber production this year will likely fall 11% to 950,000 metric tons due to heavy rains and aggressive re-planting, the minister said. That, however, is a higher estimate than industry projections of 800,000 tons to 900,000 tons.
Low prices during the first half of the year was a factor that affected output earlier in the year, Dompok said. Production is estimated to be down 29% at 541,180 tons during the January-August period, according to latest government data available. Malaysian natural rubber production fell 10% in 2008.
Dompok said production may recover next year to around 1.0 million tons.
While exports of compound rubber are on the rise amid strong Chinese demand, shipments of locally produced natural rubber to other destinations have slowed substantially. Exports fell 33% during January-September.
Due to slow growth in automotive and tire industries, demand is weak in other major markets such as the U.S., Germany, South Korea and Iran, Dompok noted. Natural rubber exports were also affected by a Malaysian decision to reduce shipments in co-ordination with Thailand and Indonesia under the Agreed Export Tonnage Scheme, to revive prices earlier this year.
Imports this year are expected to be 650,000 metric tons to 700,000 tons, Dompok said in an interview. Malaysia imported 523,000 tons of natural rubber in 2008.
On the demand side, Malaysian compound rubber exports have already surpassed 300,000 tons in the January-September period, most of it to China. That was 56% more than the 192,000 tons exported in the whole of 2008.
Dompok said Malaysian companies are importing natural rubber and processing it into compound rubber for exports. Around 95% of Malaysia's compound rubber exports are to China.
Compound rubber is a mix of natural and synthetic rubber, giving the end product greater durability, but usually around 99% of the content is natural rubber.
According to analysts, the import duty structure in China is one of the factors driving Malaysia's compound rubber exports. China imposes a 5% import duty on compound rubber while the duty on natural rubber is 20%.
Due to a surge in shipments, Malaysia recently imposed a research and development tax of 4.0 sen/kg on compound rubber exports. The tax was earlier applicable only to exports of natural rubber that was domestically produced.
The surge in compound rubber exports and fall in domestic production has led to the sudden increase in imports this year. Most of the imported rubber is of "low grade and needs to be processed before exporting it," said Dompok. Malaysia mainly imports TSR category natural rubber from Indonesia, India and Sri Lanka.
Malaysia's own natural rubber production this year will likely fall 11% to 950,000 metric tons due to heavy rains and aggressive re-planting, the minister said. That, however, is a higher estimate than industry projections of 800,000 tons to 900,000 tons.
Low prices during the first half of the year was a factor that affected output earlier in the year, Dompok said. Production is estimated to be down 29% at 541,180 tons during the January-August period, according to latest government data available. Malaysian natural rubber production fell 10% in 2008.
Dompok said production may recover next year to around 1.0 million tons.
While exports of compound rubber are on the rise amid strong Chinese demand, shipments of locally produced natural rubber to other destinations have slowed substantially. Exports fell 33% during January-September.
Due to slow growth in automotive and tire industries, demand is weak in other major markets such as the U.S., Germany, South Korea and Iran, Dompok noted. Natural rubber exports were also affected by a Malaysian decision to reduce shipments in co-ordination with Thailand and Indonesia under the Agreed Export Tonnage Scheme, to revive prices earlier this year.
(Source: irco.biz)
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