UPDATE 1-China 2009 compound rubber imports to soar-report

HO CHI MINH CITY, Vietnam, Nov 4 - China, the world's largest rubber consumer, is expected to import 950,000 tonnes of compound rubber this year, a surge of nearly 71 percent from last year, an industry report said on Wednesday.

Compound rubber contains 99 percent natural rubber and although prices are a few cents higher, it only attracts a 5 percent import duty in China versus up to 20 percent for natural rubber.

"Compound rubber import volume was increasing in recent years because the customs tax was lower than (that on) natural rubber," China's Rubber Research Institute said in a report prepared for an international conference in Ho Chi Minh City.

Compound rubber now competes with natural rubber in the export market, with many dealers in Thailand, Indonesia and Malaysia aiming to produce more to take advantage of China's import duty structure.

China bought compound rubber mainly from Malaysia, Thailand, Indonesia and also the United States but the imports were not reflected in the country's customs data. [SOF/CN]

China imports about half of what it consumes and expects demand for rubber to rise 8.5 percent to 6.4 million tonnes in 2010 because of strong growth in the country's auto sector, according to the China Rubber Industry Association. [ID:nSP449300]

The Hainan-based research body also said auto production was projected to rise to 12.5 million units this year from 9.1 million in 2008.

Domestic tyre demand could help offset a drop in China's tyre exports in 2010 and 2011, especially after the United States slapped on new duties -- a move which could also cut demand by 300,000 tonnes.

In September the United States imposed an additional duty of 35 percent on Chinese tyres, besides an existing 4 percent duty. The extra duty would fall to 30 percent in the second year and 25 percent in the third year.

China has been a rare bright spot in the struggling global auto industry as government incentives spurred an increase in demand. China overtook the United States as the world's biggest automaker in January.

It imported 1.68 million tonnes of rubber in 2008, up 2.07 percent from the previous year, in which nearly half came from main producer Thailand, according to customs data.