Natural Rubber Market Analysis-No. 20260122

1. Rubber Spot Market Analysis

This week, rubber futures maintained a slightly bullish and volatile pattern, with spot prices rising slightly in line with futures. Northern Thailand and central and northern Vietnam are transitioning to reduced production and even production stoppages, resulting in a decrease in total supply. Overseas raw material prices have stopped falling and started rising, strengthening cost support.

The seasonal accumulation trend of natural rubber inventory remains unchanged, and downstream production and sales pressure persists. Currently, the market is mixed, with no clear driving force, and the short-term market is likely to remain volatile.

This week, spot prices for natural rubber latex rose slightly, with traders showing good enthusiasm for quoting prices. Futures prices fluctuated upwards, and Southeast Asian processing plants raised their USD-denominated cargo prices, supporting traders in sales areas to maintain prices. Downstream product manufacturers are cautious about replenishing their raw material inventories due to rising prices, with some inquiries being for immediate needs, and actual transactions being negotiated.

Market Forecast:

1. Rainy weather will continue to have a disruptive impact, with raw material releases gradually.

2. The operating rate of sample tire manufacturers is expected to increase next cycle.

3. Inventory levels in Qingdao, China, continue to accumulate.

4. Exchange rates, Fed rate cuts, etc.

2. Natural Rubber Supply Analysis

2.1 Thailand Production Area

Rubber trees in northern Thailand are beginning to shed their leaves, marking the end of the tapping season. Tapping in northeastern Thailand is expected to continue until around early February, with factories showing a decreasing trend in daily rubber intake. During this period, overseas demand and domestic restocking sentiment weakened, leading to a downward trend in Thai raw material prices, but the downside potential is limited. Factory raw material inventories are generally maintained at 1-2 months, with some exceeding 3 months. Factories are gradually building up their raw material reserves for the off-season, while secondary traders report limited reserves. Factory shipments are scheduled until August.

2.2 Vietnam Production Area

This week, weather conditions in Vietnam were relatively favorable. Due to seasonal factors, overall latex production is significantly lower than during the peak season, and the dry content of raw latex is declining accordingly. Tapping is expected to gradually cease by the end of this month, and rubber processing plants are gradually entering the stockpiling phase, maintaining high purchasing activity. Raw material prices are more likely to rise than fall.

2.3 Yunnan Production Area

This week, raw material prices in Yunnan production area remained stable, as the region entered the off-season.

2.4 Hainan Production Area

Raw material prices in the Hainan production area are currently unavailable, and the tapping season has officially begun.

3. Analysis of Natural Rubber Cost and Profit Situation

3.1 Overseas Production Area: Thailand

Thailand's STR20 theoretical production profit is showing a loss. While cup lump prices declined slightly this week, the appreciation of the Thai baht has kept factory cost pressures high. Domestic traders showed little interest in increasing their positions during the cycle, overseas orders were generally weak, and factories struggled to secure high-priced offers, resulting in a loss for Thai standard rubber production.

3.2 Domestic Production Area: Hainan

Hainan's natural rubber production has officially entered the off-season; local processing plants are gradually ceasing operations.

4. Analysis of Natural Rubber Demand

4.1 Downstream Dry Rubber

China's semi-steel tire operating rate is 74%. China's all-steel tire operating rate is 63%.

Currently, tire companies' overall shipments are below expectations, coupled with pre-holiday stockpiling, leading to a continued rise in industry inventory. Overall market shipments were weak. Semi-steel all-season tires saw moderate sales, with some restocking by distributors, possibly for the pre-holiday travel peak. Snow tires saw a slight increase in sales due to low temperatures in some areas, but limited snowfall meant demand wasn't fully realized. All-steel tire demand was weak due to the off-season, with the market focused on cash collection.

4.2. Downstream of Concentrated Latex

Downstream manufacturers of natural latex products replenished their inventories as needed when prices were low. It's reported that foam factories in Wenzhou are operating at approximately 30-40% capacity. With the year-end approaching, finished product orders are gradually decreasing, and high costs are impacting profit margins, dampening factory production enthusiasm.

Raw material procurement is becoming more conservative and cautious, with a wait-and-see attitude prevailing. Regarding inventory, most factories maintain more than one month's worth of finished product inventory and one to three months' worth of raw material reserves. It's understood that a few companies have already started their holidays this week, and some processing plants plan to gradually shut down next week.

It is understood that glove factories in North China are operating at an average capacity of around 60%. The glove industry is gradually entering its seasonal off-season, with domestic sales orders for finished products being generally weak and the impact of substitutes leading to cautious restocking intentions among factories.

Currently, the inventory levels of raw materials and finished products at processing plants are generally low. As the year-end approaches, some companies are showing signs of temporary stockpiling, but the actual sentiment remains cautious and wait-and-see. Continued monitoring of demand is necessary.

5. Natural Rubber Price Spread Chart

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