On May 29, the natural rubber commodity index was 38.28, unchanged from yesterday, down 61.72% from the highest point of 100.00 in the cycle (September 1, 2011), and up 40.32% from the lowest point of 27.28 on April 2, 2020. (Note: the period refers to the period from September 1, 2011 to now)

 

Figure 2: mainstream price trend of natural rubber since May 2022

 

According to the monitoring of business agency (100ppi.com), from May 23 to 29, the average spot market price of domestic natural rubber (standard I) in East China market rose from 12730 yuan / ton to 12910 yuan / ton, of which the lowest point was 12710 yuan / ton on the 24th and the highest point was 12910 yuan / ton in the second half of the week, with a weekly increase of 1.41%.

 

Figure 3: Weekly K histogram of natural rubber market since May 2022

 

Industry analysis: macro aspect: on May 25, the national teleconference on stabilizing the economic market emphasized the solid promotion of stabilizing the economy; The impact of domestic public health incidents continues to decline. Shanghai is gradually returning to work and production. The supply of raw materials, circulation and sales of finished products are gradually recovering, especially in the next month; Loose real estate policies in many places are conducive to the improvement of market atmosphere and terminal demand; The favorable automobile consumption policies in Shenzhen, Shanghai and other places have a preference for stimulating the rubber raw material market.

 

Supply side: Thailand production area. Due to the rainy weather, the recent low output of new rubber has affected the output growth; In the production area of Vietnam, the cutting rate has reached 90%. Recently, there has been a lot of rain, which has affected the development of rubber cutting and the output of raw materials. In China’s domestic area, Yunnan has been fully opened, but the rainy weather continues this week, the output of raw materials is affected, and the stock of raw materials is already tight. In addition, some processing plants in Hainan have returned to Yunnan for processing, which has raised the local purchase price in Yunnan. According to the data of minxiang.com, the market guide price of Hainan glue was 15400 yuan / ton at the beginning of May, 18800 yuan / ton at the end of May, a cumulative increase of 3400 yuan / ton. Affected by deciduous leaf disease, Hainan has delayed cutting for many times, and the delay is better than expected. It is said that this situation will be significantly improved in the middle of next month.

 

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Demand side: first of all, the impact of public health events has weakened. Shanghai and other important circulation areas are gradually returning to work and production. The recovery of local and surrounding automobile enterprises will drive the rapid growth of raw material consumption and tire demand. Although the previous heavy truck distribution and sales data showed that the three major demands all weakened significantly, and the slow internal and external demand led to heavy inventory of finished products of tire enterprises and great pressure to remove them from the warehouse, in the short term, the gradual resumption of work and production in Shanghai is a great benefit for the smooth shipping of imported rubber raw materials to Hong Kong, warehousing and delivery of warehouse receipts. Secondly, with regard to the start-up of tire enterprises, statistics show that the domestic tire market demand has picked up, and the operating rate of tire enterprises is about 60-70%. Thirdly, the spot price of latex raw materials is rising, and the users of downstream product enterprises, including latex gloves, foaming plants, balloon plants and adhesive product plants, do not buy it. Their sales channels are blocked, resulting in the accumulation of finished product inventory, profit contraction and even loss. The enterprise is in a difficult situation.

 

In terms of inventory: the inventory of natural rubber in Qingdao decreased, while the inventory in the bonded zone decreased slightly. Statistics show that as of May 23, the inventory of 16 sample natural rubber general trade warehouses in Qingdao was 299900 tons, an increase of 25000 tons over the previous period.

 

In terms of import and export: the lack of Inbound Goods and the lack of high-cost enterprises to take over the orders led to the shortage of imported concentrated milk in the spot market. The high price and traders’ covering the orders led to almost transactions in the spot market. At the same time, the enthusiasm of concentrated milk factories in China’s domestic production areas was high and the profits of dry rubber factories were meager. In the first four months of 2022, Cambodia exported 79356 tons of rubber, a year-on-year increase of 3%, and Thailand exported 1181000 tons of natural rubber (excluding composite rubber), a year-on-year increase of 3%; The total export of natural rubber and mixed rubber was 1.637 million tons, a year-on-year increase of 4%; A total of 824000 tons were exported to China, a year-on-year decrease of 1%.

 

In terms of import and export, the tense situation of containers continues, the arrival time of shipping date is delayed seriously, and the port transportation is not smooth, and the available supply of goods is locally tense; According to the data released by the General Administration of Customs on May 9, China imported 536000 tons of natural and synthetic rubber (including latex) in April 2022, down 7.1% from 577000 tons in the same period in 2021. From January to April 2022, China imported 2.397 million tons of natural and synthetic rubber (including latex), an increase of 1.3% over 2.367 million tons in the same period of 2021.

 

Figure 4: trend chart of crude oil market since May 2022

 

Macro aspect: on May 27, the price of international crude oil futures rose. The settlement price of the main contract of WTI crude oil futures in the United States was US $115.07/barrel, up US $0.86 or 0.9%; The settlement price of the main contract of Brent crude oil futures was US $115.56/barrel, up US $1.39 or 1.22%. The US summer driving season is coming, and the demand expectation has boosted the oil price. In addition, the EU has launched negotiations on whether to completely ban the import of Russian oil..

 

Hot spots of this week: 1. The State Council recently held an executive meeting and pointed out that the current downward pressure on the economy continues to increase, and many market players are very difficult. Development is the foundation and key to solving all our problems. We should implement the deployment of the Party Central Committee and the State Council, strengthen confidence, respond decisively, fully implement the new development concept, effectively coordinate epidemic prevention and control and economic and social development, speed up the implementation of the policies set forth in the central economic work conference and the government work report, and intensify the implementation. We should adopt a package of targeted, powerful and effective range control measures in accordance with the overall thinking and policy orientation to stabilize the economic fundamentals. The meeting further deployed a package of measures to stabilize the economy, and implemented 33 measures in six aspects, including fiscal and related policies, financial policies, stabilizing the supply chain of the industrial chain, promoting consumption and effective investment (including supporting rigid and improved housing demand due to urban policies), ensuring energy security, ensuring unemployment security, providing minimum living allowances and providing assistance to people in need, so as to promote the economy to return to the normal track and ensure that it operates within a reasonable range.

 

2. In the first quarter of 2022, Thailand’s natural rubber output reached 1.35 million tons, an increase of 2.8% over 1.31 million tons in the same period last year. In terms of specific varieties, the output of cigarette glue decreased by 2% year on year; Standard glue increased by 11% year on year; Latex decreased by 2.4% year on year; The mixed rubber decreased by 8.8% year-on-year. In the first quarter, the domestic consumption of Tianjiao was 370000 tons, an increase of 95% year-on-year. As of March, the inventory of natural rubber in Thailand was 980000 tons, with a year-on-year increase of 15.7% and a month on month decrease of 5.3%.

 

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3. In the first four months of 2022, Thailand exported 1181000 tons of natural rubber (excluding composite rubber), an increase of 3% year-on-year. From January to April, the natural rubber exported to China totaled 374000 tons, a year-on-year decrease of 8%, and the mixed rubber exported from Thailand totaled 456000 tons, a year-on-year increase of 7%. In general, Thailand exported 1.637 million tons of natural rubber and mixed rubber in the first four months, a year-on-year increase of 4%; A total of 824000 tons were exported to China, a year-on-year decrease of 1%.

 

4. According to foreign media reports on May 23, the Secretary General of the natural rubber Association of Cote d’Ivoire (apromac) said on Monday that the rubber production of Cote d’Ivoire will reach at least 1.2 million tons this year, higher than 1.1 million tons last year, but will be reduced due to the deepening urbanization after 2025..

 

5. On May 29, the Shanghai Municipal People’s government issued the action plan for accelerating economic recovery and revitalization in Shanghai. The plan pointed out that before December 31, 2022, individual consumers who scrap or change their names, and buy pure electric vehicles, will be given a financial subsidy of 10000 yuan per vehicle. According to incomplete statistics, nearly 20 provinces and cities, including Guangdong Province, Hubei Province, Shandong Province, Hainan Province, Jilin Province and Fujian Province, have introduced incentive policies related to the car market this year, with a total subsidy of hundreds of millions of yuan. In some areas with a large number of cars, they have also been supplemented by loose policies such as increasing the number of license plates. According to the agency, assuming that the leverage multipliers of this stimulus policy are 3/4/5 times respectively, the corresponding consumption will be 1800/2400/300billion yuan, and the corresponding new car purchase demand will be 108/144/1.8 million.

 

Future forecast: under the background of stabilizing the national economy, all walks of life actively respond to the development difficulties, and the favorable policies for real estate and automobile have formed favorable policies for the rubber industry. From the industrial point of view, the new rubber production is low, the import volume is small, the inventory is declining, and the downstream product enterprises are facing the difficult situation of high raw material prices; The output of subsequent production areas increased, and Shanghai resumed production and increased the arrival, warehousing and delivery of imported rubber raw materials. It is believed that the shortage of latex supply in next month will be improved. It is expected that the natural rubber market will be strong in the near future, and the latex price will remain high until the output is increased. In the medium term, close attention will be paid to the improvement of downstream product enterprises’ demand for raw rubber under the favorable policies.

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