Natural Rubber Weekly Report: Prices Rise Again
1. Rubber Spot Market Analysis
This week, natural rubber prices showed a slight upward trend. Tapping in domestic and international producing areas continued to increase, but overseas factories, actively producing to fulfill orders, maintained a strong demand for raw materials, leading to high raw material procurement prices. This cost-side support for rubber prices was strong, causing spot prices to rise to new highs. However, as spot prices reached new highs, market buying interest cooled, weakening the upward momentum. In the short term, the natural rubber market is likely to fluctuate at high levels.
This week, natural rubber latex spot market prices remained relatively firm, mostly maintaining a fluctuating trend. Although domestic and international producing areas have entered a phase of increased supply, raw material and cost prices remain high. Meanwhile, imported rubber supplies in consuming areas are gradually tightening, continuing the favorable supply and cost-side conditions and supporting traders' willingness to maintain prices. However, as raw material production in producing areas gradually increases, supply faces increased pressure, while downstream product manufacturers continue to have weak operating rates and orders, resulting in poor willingness to purchase concentrated latex at current prices. High-priced transactions are difficult to complete, and slow port circulation is significantly suppressing rubber prices.
Market Outlook:
1. Improved rainfall in domestic production areas, leading to increased supply expectations;
2. Expected improved operating rates for tire sample companies in the next cycle;
3. Continued destocking trend in Qingdao, China;
4. Macroeconomic environment disturbances.
2. Natural Rubber Supply Analysis
2.1 Thailand Production Area
This week, parts of Vietnam experienced thunderstorms and short-term heavy rainfall, disrupting rubber tapping operations at times. However, the region is generally in a production increase cycle. Competition for raw materials is fierce, with state-owned and private mills bidding high prices to acquire raw materials. Some mills have orders for concentrated latex rubber booked until July, prioritizing latex production.
2.2 Vietnam Production Area
This week, the overall tapping progress in Vietnam was good, with the tapping rate continuing to rise. New rubber output steadily increased month-on-month, but the overall release pace was moderate. A concentrated release of new rubber is expected in June.
2.3 Yunnan Production Area
At the beginning of the week, intermittent rainfall in the Yunnan production area affected rubber tapping to some extent. Raw materials mainly flowed to concentrated latex plants, and the rush to buy by processing plants continued, leading to a rise in raw material prices. Towards the end of the week, weather conditions improved in the production area, but the rush to buy by processing plants continued, keeping raw material prices relatively strong.
2.4 Hainan Production Area
At the beginning of the week, the Hainan production area experienced sporadic rainfall, but the impact on raw material output was relatively limited. By mid-week, the rainfall ended, and weather conditions were good. Raw material output maintained its seasonally high trend. As raw material output increased, local processing plants faced increased pressure to ship their products, and the market's rush to buy raw materials at higher prices cooled, resulting in raw material purchase prices consolidating at high levels.
3. Analysis of Natural Rubber Cost and Profit Situation
3.1 Overseas Production Area: Thailand
Thailand's theoretical production profit for STR20 remained unprofitable. This week, cup lump purchase prices continued to rise, further increasing the raw material cost pressure on factories. Trading in the Chinese market was sluggish, making it difficult for factories to secure high-priced transactions. The theoretical production profit for Thai standard rubber remained unprofitable throughout the week.
3.2 Domestic Production Area: Hainan
The weather in Hainan is favorable, and raw material output maintains its seasonal upward trend, keeping raw material prices firm. However, the spot price of concentrated latex is weak and declining, putting pressure on the profit margins of local processing plants.
4. Natural Rubber Demand Analysis
4.1 Dry Rubber Downstream
The operating rate of semi-steel tires in China is 70%. The operating rate of all-steel tires in China is 68%.
Overall shipments from companies this period were lackluster, and inventory levels are increasing. Most domestic tire companies have not yet finalized their monthly pricing policies, with only a few launching monthly price adjustment activities. Most companies are maintaining a wait-and-see attitude. Overall domestic end-user demand is weak, continuing to drag down tire replacement demand. Some companies indicated a reduction in export orders, which may further increase overall production and sales pressure, coupled with persistent raw material cost pressures. Some companies anticipate a further decline in operating rates.
4.2 Concentrated Latex Downstream
It is understood that glove factories in North China are operating at approximately 50% capacity. Policy disruptions have subsided, and e-commerce orders are gradually recovering, leading to a slight rebound in enterprise operating rates.
However, raw material prices remain high, keeping production costs under pressure. Currently, both raw material and finished product inventories are low, and there is a general expectation of further raw material price reductions in the market. Most companies are choosing to wait and see, planning to dynamically optimize their production and operation arrangements once raw material prices return to a reasonable range.
It is understood that foam factories in Wenzhou are operating at approximately 40% capacity. While some raw material consumption has been completed, processing plants are limited by their inability to accept high-priced raw materials, thus restricting overall capacity increases.
Constrained by factors such as weak consumer expectations, the pace of finished product price adjustments is slow, and the dual pressures of insufficient orders and high costs continue to be prominent for factories. As raw material inventories gradually decline, some factories are beginning to replenish their stocks based on actual production needs.
5. Natural Rubber Price Spread Chart
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