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SunSirs: Natural Rubber has increased by more than 10% within Two Months; Peak Season is Expected in China

August 24 2020 10:37:41     SunSirs (Selena)

SunSirs data show that the natural rubber commodity index on August 20 was 32.90, unchanged with the previous day, down 67.10% from the cycle's highest point of 100.00 (2011-09-01), and 20.60% higher than the lowest point of 27.28 on April 02, 2020. (Note: period refers to 2011-09-01 to now)

The new glue is delayed and the spot glue is in short supply. In 2020, the global special situation and weather caused the opening time of Southeast Asian production area to be delayed, and the output of raw materials was slow. The main production area of natural rubber is now in the supply growth period. However, it is reported that the weather conditions in Southeast Asia are not suck. After the drought, it has entered the rainy season, and some areas have been affected by typhoons, which restricts rubber output. However, it is expected that the overall increment of supply side in the third and fourth quarters is limited. In contrast, in Hainan and Yunnan production areas, tapping has been delayed again and again this year, with drought and pest damage. The rubber output is low. At present, due to the influence of rainy season, the amount of new rubber is seriously affected. According to the local traders, the rubber storehouses in Kunming and Banna of Yunnan Province are empty, and the situation of shortage of goods continues.

The import volume increased year on year, and the mixed rubber increased greatly. According to the data released by the General Administration of Customs on August 7, 2020, China's imports of natural and synthetic rubber (including latex) totaled 677,000 tons, an increase of 22% over the same period last year; from January to July 2020, China's imports of natural and synthetic rubber (including latex) totaled 3.809 million tons, an increase of 5% compared with 3.628 million tons in the same period of 2019. From the data of the first half of the year, China's imports of natural and synthetic rubber (including latex) totaled 3.313 million tons from January to June 2020, an increase of 1.9% over the same period. From the recent statistical data, natural rubber imports continued to increase in the second and third quarter, while from the perspective of imported varieties, standard rubber fell year-on-year, and mixed rubber increased significantly year-on-year. Among them, the data shows that Vietnam's export of mixed rubber in the first half of the year increased by 1.4%, while the export volume of Thailand in the first half year decreased year on year: 477,300 tons of standard rubber, down 33.83%, 906,400 tons of mixed rubber, a 50.64% increase year-on-year; in general, China's imports of mixed rubber in the first half of the year increased by 17.5%, while the import of standard rubber was only 575,100 tons, a year-on-year decrease of 21.05%.

The inventory of imported rubber is high while that of domestic rubber is very low. It is reported that China's ports such as Qingdao, Shanghai and other ports continue to increase the number of imported rubber, and the stock of spot import warehouses is constantly increasing. However, there is not much local rubber inventory in Hainan and Yunnan, and the domestic rubber supply continues to be tight. It is reported that the local complaints of Kunming and Banna are basically empty. As of August 21, warehouse receipts and futures inventories of the exchange were 248,180 tons and 226,130 tons respectively, an increase of 10,548 tons and a decrease of 220 tons compared with last week. It is reported that the dominant inventory of Qingdao and Shanghai ports and the hidden inventory of production and marketing areas are about 1.1 million tons. It is estimated that the stock of natural rubber in China will reach about 1.5 million tons. The inventory of natural rubber in East China is still high. High port inventory and low Warehouse Receipt Inventory coexist this month.

The operating rate continued to rise slightly. According to the data, as of the week of August 13, the operating rate of all steel tire enterprises was 72.80%, which was flat on a month on month basis, with a year-on-year increase of 26.33%; the operating rate of semi steel tire enterprises was 66.27%, up 1.17% month on month and 3.49% year on year. In the third quarter, the industry situation improved to a certain extent, and the demand continued to recover; the overseas epidemic situation remained grim. According to the semi annual report of 2020, all eight foreign tire giant enterprises lost money. At present, China's tire export situation is still not optimistic, and the uncertainty in the later stage is still large.

Downstream demand is gradually warming. On August 11, the China Automobile Industry Association held an information conference to officially announce the latest production and sales data of China's automobile market in July 2020. According to the data, in July, the automobile production and sales continued the warming trend since the second quarter. In that month, China's automobile production and sales reached 2.201 million and 2.12 million, respectively, with a year-on-year growth of 21.9% and 16.4%. Multiple groups of data show that the automobile industry has gradually warmed up since the third quarter, and the downstream demand for natural rubber has continued to grow. Although the speed is relatively slow, there are strong expectations for the peak season of demand.

Market Forecast

According to the analysis of SunSirs, the unique local difference of inventory in 2020 is still continuing, and the shortage of domestic rubber is still severe. Without the release of the local index glue in Yunnan, the inventory will be basically emptied, and the imported rubber in Qingdao, Shanghai and other places will continue to increase, and the warehouse receipt inventory will increase significantly. It is rainy season in Southeast Asian rubber producing countries, and the new rubber output is limited. The delayed new rubber production will continue to be delayed. It is expected that the overall output will be reduced in 2020. From the downstream situation, the continuous rise in the operating rate of tire enterprises and the year-on-year increase of automobile sales volume show that the current demand is constantly improving; although the inventory in the north is still high, the industry still gives good expectations for the peak season.

 

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