NR Price Analysis: Global Supply & Demand
Market Review: As floods in Thailand gradually recede, rubber tapping and factory production resume, and the anticipated increase in supply is putting downward pressure on raw material prices, leading to a decline in overseas raw material prices. In Yunnan, rubber tapping has largely ceased, and latex production lines are gradually shutting down, resulting in firm raw material prices.
Downstream demand is in a seasonal off-season, with weak end-user demand coupled with ample supply, leading to an increase in finished product inventories. Natural rubber spot inventories continue to accumulate significantly, dragging rubber prices into a downward trend.
Supply Side
Thailand: Northeast Thailand maintains peak production, and cup lump prices continue to decline. In southern Thailand, as floods gradually recede, rubber tapping and factory production resume. Although there is some competition for raw materials, the anticipated increase in supply is putting downward pressure on raw material prices, causing latex prices to fall.
Vietnam: Weather conditions in Vietnamese rubber-producing areas are showing regional variations. Rainfall in the south last night briefly affected tapping operations, while the impact of extreme weather in the central and northern regions weakened. Due to reduced rubber imports, factory procurement costs have increased, and with raw material prices lower than supply, factories are slowing down their import pace. The tight supply of raw materials is supporting price increases.
Yunnan: Yunnan is gradually ceasing all rubber tapping, and full-latex factories are successively shutting down. The spot market has seen a slight increase compared to the previous period, with profits recovering slightly, but overall losses remain difficult to alleviate. Some concentrated latex factories will also gradually cease operations over the weekend or early next week.
Hainan: Increased rainfall in Hainan's production areas has intensified disruptions to rubber tapping operations. Simultaneously, falling temperatures have reduced the dry content of fresh latex to around 26-27%, resulting in a seasonal decrease in raw material output. However, dragged down by falling futures and imported concentrated latex prices, local processing plants have become less willing to purchase raw materials at high prices, leading to a reduction in raw material purchase prices.
Demand Side
Regarding semi-steel tires, the market is weak due to the month-end transition. The all-season tire market is operating steadily, with distributors replenishing their stocks at the end of the month to meet sales targets, resulting in average channel sales. The snow tire market has ample supply, but demand needs further improvement.
In the all-steel tire market, trading was sluggish. Affected by the seasonal off-season, market demand weakened further. With relatively ample supply, the focus was on digesting existing inventory, resulting in generally low purchasing activity. Market transaction prices remained stable with a slight downward trend. To increase sales and recover funds, some merchants engaged in promotional activities based on their own inventory levels.
China's semi-steel tire operating rate is 68%. China's all-steel tire operating rate is 64%. The operating rate recovered somewhat this week, with maintenance shutdowns gradually resuming, boosting the overall operating rate. However, overall sales pressure remains, with some companies producing slightly below normal levels. Combined with maintenance schedules for some companies during the week, this limited the extent of the increase in the operating rate.
Market Outlook
In the short term, the increased supply during the peak overseas production season will exert far greater pressure on the natural rubber market than the domestic production shutdown sentiment. Raw material prices in Thailand may accelerate their decline. Coupled with seasonal inventory accumulation pressure and weak end-user demand, the natural rubber market faces multiple negative factors in the short term, and rubber prices still have room to fall further.
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