SunSirs: Weak Demand in August, China Domestic Market of Natural Rubber continued to be Low and Volatile

According to the monitoring of SunSirs, the natural rubber commodity index on August 31 was 35.56, down 0.17 points from the previous day, down 64.44% from the highest point 100.00 (2011-09-01) in the cycle, and up 30.35% from the lowest point 27.28 on April 2, 2020. (Note: the period refers to September 1, 2011 to now)

According to the monitoring of SunSirs, in August, the domestic natural rubber (standard 1) market in the East China market showed a continuous fluctuation and a slight downward trend: on August 1, the mainstream price in the East China market was about 12,240 RMB/ ton, and on the August 31, the main price was 11,990 RMB/ ton. The spot price again fell below 12,000 RMB/ ton, with a monthly drop of 2.04%. Among them, the highest price of this month was 12,304 RMB/ ton on the 9th, the lowest point was 11,990 RMB/ ton on the 31st, and the maximum amplitude was 2.55%. According to the data of SunSirs, the mainstream spot market of natural rubber in East China (Hainan Baodao) has dropped by more than 12% since 13,748 RMB/ ton at the beginning of 2022. The lowest price in the period was 11,910 RMB/ ton on July 22. Under the current industrial situation of weak supply and demand, the market is at the annual trough.

Macroscopically: in August, the trend of international crude oil futures showed a "W" shape, especially from the 17th to the 25th of the same month, it rose by about 10% continuously. Near the end of the month, it first fell slightly, then rose, and then fell sharply. On August 20, international crude oil futures fell sharply: the settlement price of the main contract of WTI crude oil futures in the United States was reported at US $91.64/ barrel, a decrease of US $5.37 or 5.5%; The settlement price of the main contract of Brent crude oil futures was US $97.84/ barrel, down US $5.09 or 4.9%. As OPEC's second largest crude oil exporter, the turmoil in Iraq has not affected crude oil exports, and it is rumored that Iran's nuclear agreement is expected to be reached. In addition, the market is generally worried that in order to combat inflation, the global central bank's interest rate increase will lead to economic recession, which will then affect fuel demand and put pressure on oil prices.

Industrial analysis: on the supply side, August is the seasonal peak season for rubber production at home and abroad, and the price of Thai glue continues to fall. The sharp contrast between the falling sales profits of the country's rubber farmers and the rising production and living costs has been reported to the government departments. It cannot be said that the sharp drop in domestic rubber prices has had a considerable impact on their production; The output of China's domestic area is normal. Although it has been affected by some public health events in Hainan and heavy rain, the rubber production continues to increase. At the import and export end, China imported 580000 tons of natural rubber (including latex and mixed rubber) in July, a year-on-year increase of 10.5%. From January to July, China imported 3.975 million tons of natural and synthetic rubber (including latex), an increase of 4.1% over 3.819 million tons in the same period of 2021; This month, the import of rubber to Hong Kong increased significantly. On the inventory side, Qingdao: as of August 26, the consumption of rubber inventory and social inventory in the bonded area was slow and continued to increase; Previous period: 261,850 tons of rubber futures warehouse receipts on August 31, an increase of 1240 tons over the previous trading day; In the latest week, rubber futures warehouse receipts increased by 2750 tons, an increase of 1.06%; In the latest month, rubber futures warehouse receipts increased by 7,020 tons, an increase of 2.75%. On the demand side, affected by high-temperature weather in the early part of this month, electricity and production were limited in many places, and the operating rate was greatly affected. The overall operating rate remained at about 50% to 60%, and the stock of finished tires in stock continued to be high. Export and domestic sales were not objective. The enterprise's operation was positively affected, and the overall industry prosperity was general. In the second half of the month, with the fall of high temperature in autumn, the operating rate of downstream enterprises gradually warmed up: as of August 25, the operating rate of domestic all steel tires was 58.63% (+1.82%), The domestic operating rate of semi steel tire is 61.66% (+0.33%).

Market forecast: Although the continuous rise of international crude oil for many days in August has driven the sentiment of commodity investment market to a certain extent, under the background of international economic recession, affected by weak overseas demand expectations and no improvement in domestic demand, the downstream purchasing sentiment of natural rubber has been suppressed. This month's market is close to the annual lowest price on July 22, and is at the trough of the annual market. As for the future market, as the impact of high temperature weather in autumn on the start-up of enterprises eases, the promotion effect of automobile promotion policies on the market continues, the market generally has expectations for the peak sales season, and the downstream demand continues to improve, so that the market can move forward. However, in the short term, it is more likely that natural rubber market will continue to be weak in China.

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