Rubber Market Outlook (January 30)
Market Review: Recently, some overseas rubber-producing regions have transitioned to the off-season for production reduction, resulting in a significant decrease in global supply. Coupled with overseas factories stockpiling raw materials, raw material procurement prices remain high, providing strong support on the cost side. Tire companies actively stockpiled earlier, and the strong macroeconomic commodity market sentiment boosted bullish sentiment, causing rubber prices to surge again and break through previous levels.
Supply Side:
Northern Thailand has entered the off-season for rubber tapping, while northeastern Thailand is nearing the end of its tapping season, expected to cease in early February. Southern Thailand maintains peak production. Currently, the overall Thai rubber-producing region is entering a seasonal supply reduction phase, making raw material procurement prices more likely to rise than fall.
Factory raw material inventories are generally around 2-3 months' worth, and factories and secondary dealers still have restocking needs. Orders for Thai tire factories are still acceptable, with overseas demand for immediate purchases, and factory shipments are scheduled for August/September.
In the short term, as Thai rubber-producing regions gradually transition from the peak tapping season to the off-season, total supply is expected to gradually decrease. Coupled with the stockpiling intentions of factories and secondary dealers, raw material procurement prices are expected to rise more likely than fall.
The weather in Vietnam's rubber-producing regions is sunny and favorable, and the tapping season is nearing its end. Tapping in the southern regions is expected to continue until before the Lunar New Year, with local processing plants stockpiling. Raw material prices in these regions remained high and volatile throughout the week.
As the tapping season nears its end, local processing plants are less willing to actively sell, exhibiting a strong reluctance to sell.
Due to the relatively weak acceptance of high prices in the Chinese market, factories are prioritizing shipments to the Vietnamese domestic market and the international market, where prices are relatively more favorable. As the tapping season continues, raw material supply will continue to tighten, and supported by fundamentals, raw material prices in the producing regions are expected to remain high and strong.
Demand Side
Regarding production, some semi-steel tire manufacturers, supported by export orders, have slightly increased their production, supporting their operating rates. All-steel tire shipments have been lackluster, with some companies still maintaining production controls, dragging down their operating rates slightly.
In the market, distributors are stockpiling small quantities of semi-steel tires as the end of the month approaches, but sales at the distribution channels and end-users are weak, resulting in slow inventory depletion. Replenishment by primary distributors has further increased social inventory.
The all-steel tire market remained sluggish in the latter half of the month, with both channel sales and end-user demand remaining weak. Merchants focused on collecting payments. Some brands held market sales meetings, but promotional policies were not very effective. Downstream buyers were cautious in their purchasing, with most postponing their purchases until after the holiday.
Market Outlook
In the short term, the expectation of a seasonal reduction in global supply is strengthening, and overseas raw material prices have room to continue rising, providing a boost to rubber prices from the cost side. Downstream buyers have largely completed their pre-Chinese New Year stockpiling and are resistant to current high raw material prices.
Recent market fluctuations have followed the general commodity market, but given the significant short-term increase in rubber prices, the risk of a correction should be noted.
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