Natural Rubber Weekly Report
1. Rubber Spot Market Analysis
This week, natural rubber prices fluctuated upwards. Currently, overseas production is low, keeping raw material prices high, while domestic production is gradually starting, with expectations of increased raw material supply. The combination of high overseas prices and increased domestic supply creates a tug-of-war between bullish and bearish sentiment. Coupled with the weakening support from synthetic rubber for natural rubber, the upside potential of the natural rubber market is limited, and the market is expected to continue its high-level range-bound trading pattern in the short term.
This week, natural rubber spot market prices consolidated at high levels. Traders were relatively active in offering prices. The futures market showed a strong upward trend, boosting market sentiment. Domestic production is limited in the early stages of tapping, and with little pressure on port circulation, traders are reluctant to sell and are maintaining prices. Downstream product manufacturers are showing moderate buying interest, negotiating prices only for immediate needs.
Market Forecast:
1. Domestic tapping is gradually starting, and cost support may decline.
2. The operating rate of sample tire manufacturers is expected to adjust only slightly in the next cycle.
3. Inventory in Qingdao, China, continues to decline.
4. Exchange rates, Fed rate cuts, etc.
2. Natural Rubber Supply Analysis
2.1 Thailand Production Area
Thai latex prices continued to rise during the period. High temperatures in Thailand disrupted supply, leading to further increases in raw material prices. During the off-season, raw material supply was essentially in a state of high prices but low volume, with secondary traders still holding stockpiled goods. Factory raw material inventories were generally around 2-3 months' worth, lower than the same period last year. Finished product inventories at factories were generally low during the off-season. Due to geopolitical disturbances in the Middle East, rising local energy prices and increased fertilizer costs in Thailand increased pressure to sell.
2.2 Vietnam Production Area
This week, Vietnam's rubber-producing areas remained in the off-season. Rubber tree phenology was good, with no extreme weather disturbances. Tapping is expected to begin gradually from south to north in early April, with trial tapping starting in the southern regions. Although the start of tapping is approaching, the short-term spot supply remains tight, and factories are still reluctant to sell.
2.3 Yunnan Production Area
This week, the Yunnan production area experienced drought conditions compared to the previous period, impacting rubber production. Competition for latex between concentrated latex and whole latex was particularly pronounced, leading to an upward trend in raw material prices. Simultaneously, the supply of rubber blocks was relatively scarce, mainly due to processing plants having largely used up last year's rubber block stock, limiting latex production. Most enterprises are operating at near full capacity, while a few smaller enterprises are still undergoing maintenance.
2.4 Hainan Production Area
Since late March, tapping began in the southern parts of Hainan Island, including Lingshui, Ledong, and Baoting. In early April, tapping gradually started in the western areas, including Danzhou and Baisha, marking the official start of the new rubber tapping season in Hainan's main natural rubber producing areas. Currently, the production area is in the early stages of tapping, and coupled with the recent high temperatures, overall latex production is relatively limited. It is expected that large-scale tapping will gradually resume after the Qingming Festival holiday, but the current drought in the central and eastern rubber-producing areas is restricting tapping operations. Furthermore, the weather forecast for the next week indicates that Hainan will continue to face high-temperature warnings, which may further affect the normal tapping schedule.
3. Analysis of Natural Rubber Cost and Profit Situation
3.1. Overseas Production Areas: Thailand
The theoretical production profit of Thai STR20 rubber slightly widened compared to the previous period. During the period, the center of gravity for factory cup lump purchases continued to rise. Increased local energy prices and transportation costs in Thailand strengthened factories' willingness to maintain prices, but actual transaction volume was weak. The theoretical profit of Thai standard rubber slightly widened compared to the previous period, and the willingness to ship was low.
3.2. Domestic Production Areas: Hainan
Natural rubber in Hainan is in the early stages of tapping; most concentrated latex processing plants in the area have not yet started operation, and there is currently no profit for processing plants.
4. Analysis of Natural Rubber Demand
4.1. Downstream of Dry Rubber
The operating rate of semi-steel tires in China is 78%. The operating rate of all-steel tires in China is 72%. The tire operating rate slightly declined compared to the previous week. Many tire companies are still experiencing shortages, and production schedules are relatively stable, supporting the overall operating rate. However, due to geopolitical conflicts in the Middle East and high cost pressures, some semi-steel tire manufacturers temporarily suspended production, while some all-steel tire manufacturers slightly reduced their output, thus dragging down the overall operating rate slightly.
4.2 Downstream of Concentrated Rubber
It is understood that the average operating rate of glove factories in North China is roughly 50-70%, with differences between large and small factories. Recently, due to escalating geopolitical risks, the prices of chemical raw materials have risen sharply, increasing the pressure on factory production costs. Factories have successively raised the prices of finished gloves. Driven by a "buy high" mentality, end-users and distributors have accelerated their procurement, and factory sales are still acceptable. However, with the tapping season about to begin in domestic natural rubber producing areas, factories are generally cautious about purchasing raw materials at current prices.
It is reported that the operating rate of foam factories in Wenzhou has slightly increased to around 50-60%, roughly returning to last year's average level. However, the actual improvement in shipments is limited, and due to factors such as consumption expectations, price adjustments for finished products have not yet been implemented. Factories face continued pressure from orders and costs, leading to a cautious attitude towards raw material procurement. Inventories are mostly maintained at a reasonable level of around 1-2 months, with buyers primarily purchasing on demand and at lower prices.
5. Natural Rubber Price Spread Chart
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