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SunSirs: The Positive Situation Causes Over 8% Increase in July Natural Rubber, After-market Has the Potential to Hit Higher
August 03 2020 10:18:40SunSirs(Joyce)

Pulling Up Wildly at The End of The Month

According to the data from SunSirs, on July 30 the natural rubber commodity index is 32.41, an increase of 0.85 points from yesterday. It decreases 57.69%, compared with the highest 100 points (2011-09-01) within the cycle. And it increases 18.80%, compared with the highest 27.28 points. (The cycle refers to 2011-09-01 to present.

The data of natural rubber (mark 1) in East China monitored by SunSirs shows that the mainstream price of Baodao SCRWF on July 1 was about 10,089 RMB/ton, and the mainstream price on the 30th was about 10,910 RMB/ton, a monthly increase of 8.14%. On the 30th, the price is 10,910 RMB/ton, the highest price of the month, and 1,089 RMB/ton on the 1st is the lowest point of the month, so the largest shock amplitude is 8.14%. The last few days of this month, the price continues to pull up, reaching a maximum of 11,100 RMB/ton, which greatly pushed up the price of natural rubber this month; and this pull is more of a game between long and short futures.

Many ends pull up at the end of the month. The rubber contract 09 this month fluctuates around 10,600 RMB/ton for many days, and begins to oscillate in the second half of the month. It breaks through the previous highs, and especially in the last few days of the month, the ends continue to rise, highlighting the strength.

Imports increase year-on-year. According to data released by the General Administration of Customs of China on July 14, China imported 534,000 tons of natural and synthetic rubber (including latex) in June 2020, a year-on-year increase of 21%. From January to June 2020, China imported 3.133 million tons of natural and synthetic rubber (including latex), an increase of 1.9% over the same period. From the perspective of import sources, Vietnam's export of mixed rubber to China in the first half of the year increased by 1.4% year-on-year; Thailand's export volume in the first half of the year decrease, and the export of mixed rubber increased by 50%. The domestic economic situation continues to recover, and the downstream rubber industry is slowly improving.

Inventory levels vary. As of July 31, the Shanghai Futures Exchange's warehouse receipts and futures stocks were 237,846 tons and 230,140 tons, a decrease of 5,041 tons and 970 tons from last week respectively.

It is reported that the explicit inventory in Qingdao and Shanghai ports and the hidden inventory in the production and sales areas are about 1.1 million tons. China natural rubber inventory is expected to reach about 1.5 million tons, and the natural rubber inventory in East China is still high. This month, the situation of high port inventory and low warehouse receipt inventory coexisted.

The operating rate continues to rise. As the data shows, up to the week of July 24, all-steel tire companies are 71.62%, higher 0.46% month-on-month and 0.43% year-on-year; the operating rate of semi-steel tire companies was 66.49%, up 1.03% month-on-month and down 3.15% year-on-year. China epidemic situation is good and the demand continues to recover. However, the overseas epidemic situation is still severe, and the recovery of China tire export situation is slow, and there is still greater uncertainty in the later period.

January To July The Trend Shows A Half V

2020 is a special year. under the influence of special factors, all walks of life seem to pause the button, or are like in the slow lens, and the normal operating trajectory is delayed or curtailed. Natural rubber, as a sensitive agricultural products and strategic industrial products, its market trend closely follows the changes in macro environment. SunSirs monitoring the natural rubber market price shows that the natural rubber from January 1 (12,130 RMB / ton),continues a jolting fall to the end of March at the beginning of April 9,100 RMB/ ton, which is the lowest price in more than 10 years, and no doubt completes the "V" trend of the left part - a sharp decline of nearly 24%; While all walks of life from March reopen successively, the downstream demands gradually recover. Starting from April, the natural rubber is gradually into the rebound trend. Although the process is full of repeat and relatively slow, the first half of the year natural rubber still has an 8.48% increase, ending with 10,078 RMB / ton of mainstream market prices; From the beginning of the second half of the year, the natural rubber increase reaches 8.26%, and the rebounded speed is apparently quick. During this period of time, the downstream operating rate continues to climb, and the lasting positive demand is part of the factors, but it can’t reach the degree of pulling up largely in a short time. In addition, as the traders reflect, the continuous surge in the price of several days at the end of the month was caused by the 09 contract with long futures.

The Aftermarket Trend Is Good

SunSirs analysis supposes that, 2020 to date, due to a variety of factors, new rubber output still does not meet market demand. Its previous price decline caused by a large number of listings does not yet appear this year. In Yunnan Banna area, the new natural rubber continues to be short, and in Shanghai market, the part of the rubber supply also appears shortage; In Shanghai Futures Exchange, the warehouse inventory is low, but the imported rubber inventory by ports is still high. The regional supply differences are very obvious and will continue, at present, China's natural rubber production area has entered the rainy season, so it is impossible to predict when the future market natural rubber will be able to list in a large quantity. Southeast Asian rubber-producing countries have made some progress in the prevention and control of the recent pandemic, and economic activities have resumed one after another, but the situation is not the same in many countries. The output of new rubber is still limited. At present, under the influence of special circumstances, the recovery of foreign orders of the downstream enterprises is still unpredictable, but from the month-on-month increase in the rate of operating, the slow but good recovery trend can be seen. Combined with multiple factors at the moment, the natural rubber has long been in the low range of the price. the recent high trend is stronger, so during its repeated shock process, the decline will not be very sheer. From china's economic recovery situation, Chinese economy will continue to be good in the third quarter. In Yunnan, especially in the Panna region, the supply tension still sustains the price, especially for the local price. Coupled with Southeast Asian rubber country delaying cutting glue for 2 months, the late environment is unpredictable, but the year-on-year decline in the output of this year has become a certainty. Maintaining the view that the after-market natural rubber will meet the small shock, and with the gradual consumption of spot glue inventory, the price is expected to repeatedly rush up, until a large number of new natural rubber list.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.

 

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