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SunSirs: With the Tighter Output and Reducing Inventory in November, Nature Rubber was Favored by Funds with Price Up

December 04 2019 11:58:23     SunSirs (Daisy)

1. Price Trend

According to the data of, on November 1, 2019, the average domestic market price of natural rubber (standard one) in China was 11,230 RMB/ ton, and the average market price on November 25 was 12,116 RMB/ton, with an increase at 7.89%. And then, the price goes down. Up to November 29, the price of natural rubber decrease to 11,790 RMB/ton. Among them, 12,116 RMB/ton on November 25 is the highest price of 2019 natural rubber market in China so far according to

In 2019, the natural rubber market has fluctuated between 10,000 RMB/ton and 12200 R7MB/ton. And the overall price has risen three times. 12,070 RMB/ton on March 4 is the first high price. 12,020 RMB/ton on June 11 was the second highest price, and the price of 12,116 RMB/ton on November 25 was the highest price during the year. On the other hand, there are two downward troughs. 10,700 RMB/ton at the end of April and early May was the first trough. The price of 10,260 RMB/ton from the end of July to the beginning of August is the lowest price this year. Overall, November 2019 is a month that can be viewed more positively for the market.

Compared with the highest price, the current price of natural rubber, which has fallen by three-quarters, has fluctuated for more than half a year at a low price range around 2,000 RMB/ ton. It has fallen to its lowest level in June since June lasting for 5 month. The price of rubber continued to fluctuate in the second half of the year, experiencing the traditional consumption season of "Golden September and Silver October ", associated with the impact of heavy rain and fungal diseases in Southeast Asia. Therefore the output was limited, and the natural rubber market has improved. Since November, China’s producing district is about to enter the cut-off period. At this time, funds are gradually favoring natural rubber, and it has risen sharply on the start of the second half of the day. Natural rubber has finally stopped decreasing and begins to rise. Here comes a wave of "slightly eye-catching" quotes from the industry. However, during the upward price period, the purchasing side waited, and the actual transaction was not very active. At the end of November, the market turns good and the procurement was relatively active. For the market forecasting, it is still relatively optimistic.

2. Marketing Analysis

Supply: domestic production areas in Yunnan have gradually stopped cutting rubber at the end of November. The about one-third of rubber has stopped cutting, and the cutting has basically stopped in mid-December. Hainan province will also stop cutting in December. Foreign production areas such as Thailand and Malaysia suffered from fungal diseases, and the yield has a certain impact. The latest report of the International Tripartite Rubber Council (ITRC) shows that 382,000 hectares of rubber plantations in Indonesia were affected by fungal diseases in the first half of the year, which is expected to cause this year Indonesian rubber exports are expected to decline as much as 540,000 tons. At the same time, in the second half of the year, Narathiwat, which borders Malaysia on southern Thailand, was also attacked by fungal viruses. At least 50,000 hectares of plantations are expected to be affected. Based on the damage of the three countries mentioned above, ITRC believes that rubber production in Thailand, Indonesia and Malaysia is expected to decrease by 800,000 tons this year. In general, the gradual tightening of natural rubber production is the biggest price influencing factor for the market. Since the Shanghai rubber surged sharply on November 20th, the spot of natural rubber has gradually followed up. In the last week, the price went down and procurement has been relatively active.

Inventory: This month's inventory has decreased significantly. Up to November 29, 2019, the natural rubber inventory of the previous period has decreased by 26.259 million tons to 222.8282 million tons. The warehouse receipts have decreased by 29.36.8 million tons to 167.2 million tons. This is also the best inventory change news for the market since 2019.

Import and Export: China's customs data shows that in October 2019, China's natural and synthetic rubber (including latex) imports were 500,000 tons, a decrease of 8.4% from last month's 546,000 tons. From January to October, China's natural and synthetic rubber (Including latex) imports totaled 5.213 million tons. In Southeast Asia, Thailand’s natural rubber exports in October fell by 24% year-on-year and increased by 8% month-on-month. Benefiting from Thailand’s four-month export restriction order expiring at the end of September, Thailand said it adopted policies to support rubber farmers.

Demand: As per data shows that in October, the production and sales of heavy goods vehicles were all 91,000 units, an increase of 12.3% and 8.3% month-on-month, and an increase of 25.8% and 14.1% year-on-year. From January to October, the production and sales of heavy goods vehicles were 942,000 and 980,000, a year-on-year increase of 2% and 0.4%. It is reported that the current operating rate of downstream tire companies is about 70%, and the demand for rubber purchases also needs to consider seasonal and environmental factors.

3. Market Forecasting

SunSirs' natural rubber analysts believe that the natural rubber market is ushering in an excellent market supply and demand structure with tight output and sharply reduced inventory. In November, prices rose significantly. Downstream procurement demand was relatively stable, and the overall supply and demand had short-term positive factors. It is expected that after the short-term technical correction, due to the combined factors of fungal diseases in China’s domestic regions, which have stopped cutting in China and the peak season in Southeast Asia, there is still room for upward movement in the later period.

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