Natural rubber prices may continue to decline

Affected by the diving of commodity stocks such as the US and European stocks and oil, the natural rubber market and the spot market experienced a widening decline on August 19. Both main contracts RU1201 and RU1109 closed at 33,200 yuan (t price, the same below). Continue the decline. As of August 24, RU1201 closed at 33,105 yuan and RU1109 closed at 33,155 yuan. Due to the current empty atmosphere in the market, I expect the natural rubber market will continue to shake down to seek support.

First of all, sufficient market supply does not support the market to do more. Before the end of September, it belongs to the peak season of tapping rubber. Despite the weather and other factors, the growth of natural rubber this year may be slightly lower than expected at the beginning of the year, but the growth is already a foregone conclusion. The Indonesian Rubber Association said on August 4th that Indonesia’s natural rubber production in the first half of the year increased by 26% over the same period of last year, and it is expected that the annual production of natural rubber will increase by more than 8%. Recently, the thundery weather in the main producing areas of natural rubber at home and abroad has caused some impact on tapping, but the impact will not be too great. The Thai Rubber Association ** said that due to flooding, Thailand's natural rubber production this year is down 1% from the forecast, and is expected to be about 3.46 million tons, which is still nearly 10% higher than last year. According to the data released by the International Rubber Research Organization, natural rubber production is expected to increase by 5.8% this year due to the higher market prices that have prompted rubber farmers to increase the amount of rubber tapped. The overall increase in production, especially in the recent tapping season, there will be almost no shortage of supply of natural rubber.

Second, weaker downstream demand does not support price increases. This year China's rubber consumption in the off-season takes longer than traditional time, and rubber consumption is much lower than expected. After May, the automotive and tire markets were not satisfactory, and the production and sales of commercial vehicles with large tire consumption ratios were in negative growth. August and September are the traditional off-season production and sales of automobiles and tires, and the overall demand for rubber will remain sluggish. At present, on the one hand, tire manufacturers are affected by the reduction in orders in the off-season, and factory production is insufficient. On the other hand, high-temperature weather and limited production and power cuts also cause under-employment. The operating rate of tire factories in Shandong is generally between 70% and 80%. There is no sign of improvement in the short term.

China's natural rubber imports fell to a low of 110,000 tons in June, and only 130,000 tons in July, a year-on-year decrease of 13.3%. Reflecting that traders are not optimistic about the market outlook, while stepping up shipments, the procurement of warehouses is also more cautious. Thailand, Indonesia and other suppliers have formed a backlog, and sellers in Southeast Asia are waiting for China to expand imports around September. However, from the perspective of the sluggish tire production in China, the current enthusiasm of manufacturers and traders for replenishment is not high, and China's substantial increase in imports of natural rubber may be delayed until September. Before the National Day, China's rubber consumption is difficult to turn and it is not conducive to rubber prices.

Again, the macroeconomic situation is not conducive to the upward trend of the market. The global economic outlook is uncertain and increasingly complex, making businessmen less confident. International crude oil prices have dropped significantly, from US$100/bbl to US$80/bbl, which has reduced the cost of synthetic rubber and inhibited the upward movement of natural rubber prices.

At the same time, domestic inflationary pressures continue and the tightening expectations are still there. The central bank recently stated that it is the primary task of macro-control to stabilize the general price level and continue to adhere to the implementation of a prudent monetary policy. In July, China's manufacturing PMI index fell to a low of 50.7, indicating that China's economic growth is slowing, especially in the capital-intensive tire industry, where investment has slowed significantly. In the short term, global growth fears will continue to dominate the market. Combat natural rubber consumer confidence is not conducive to the market to do more.

In the short-term, natural rubber has a dominant position in the air, and the price is likely to fluctuate downwards. It is expected that after the National Day, 31 million yuan will be supported.