Rubber Prices: Rain Hinders Supply, Costs Hold

Introduction: Frequent rainfall in major production areas at home and abroad has hindered rubber tapping, and rubber factories are rushing to buy raw materials to push up prices, with significant cost rigidity support; on the other hand, the macro-boosted futures market fluctuated higher, and the center of gravity of spot quotations was adjusted upward.

Downstream companies were resistant to high prices and were cautious and wait-and-see. Buying was light, which restricted the increase in rubber prices. The cost side support was relatively strong recently, and the center of gravity of rubber prices showed signs of rising.

Rainfall continues to interfere, and raw material prices remain high

The uninterrupted rain in the Thai production area has led to continuous obstruction of rubber tapping. Some factories have increased prices to rush for raw material production, and raw material prices have begun to rise continuously; Vietnam's production areas have basically started tapping, but due to the rainy season, the supply of raw materials in the market is tight, and processing plants still need to purchase raw materials at high prices to meet production needs.

Frequent rainfall in the Yunnan production area affects the rubber tapping process, the supply of raw materials continues to be tight, and the acquisition resistance remains unchanged. The concentrated milk factory remains strong, and the standard rubber processing plant has difficulty in acquiring raw materials, and the acquisition price in the region remains strong.

The weather conditions in Hainan production area have improved, and rubber tapping has been gradually resumed, but the overall seasonal increase of new rubber is slow, and the competition for raw material procurement in the market has intensified, driving the purchase price of rubber to rise continuously.

Overall, the tapping of domestic and foreign production areas is progressing normally, but the intermittent rainfall in the current production area interferes with rubber tapping operations, and the output of new rubber is slow, which to a certain extent supports the firm purchase price of raw materials, and the cost side supports relatively strong.

The production and sales pressure of tire companies remains unchanged, and inventory continues to increase.

In terms of the start-up situation of tire companies, the start-up rate of semi-steel tire companies has fluctuated. Some companies have increased production moderately to meet order demand, and some companies have suspended production due to power plant maintenance, limiting the increase in the start-up rate. The replacement market price continued last week.

There was no obvious improvement in terminal demand, and the production capacity of production companies was sufficient. In the case of weak new foreign trade orders, part of the production capacity and sales tasks were transferred to the domestic market. As the factory supply shifted to the domestic market, social inventory continued to increase.

In terms of full-steel tires, the production schedule of companies that had undergone maintenance in the early stage gradually returned to the normal level, driving the overall start-up situation of full-steel tire companies to improve. The price of the replacement market is relatively stable.

Theoretically, the terminal demand is in the peak season, but the actual performance is flat and lower than the expectations of the industry. In order to complete the sales task, the agents supply goods to the downstream channel stores. The terminal stores have flat shipments and the inventory has increased compared with the previous period. The export market has performed relatively steadily. Enterprises and domestic and foreign traders actively expand overseas markets to support production and sales.

Overall, with the expectation of easing rainfall in the later period, the current competition for raw material procurement in processing plants will be eased to a certain extent. The domestic production area of ​​Yunnan will gradually enter the replacement planting indicators at the end of the month, and there is an expectation of pressure on supply.

The expectation of weakening domestic and foreign cost support is rising. The production schedule of downstream demand full steel tire enterprises is temporarily stable, and the resumption of work of maintenance semi-steel tire enterprises has a certain pull on the start-up, but most enterprises flexibly adjust the production schedule according to their own orders and inventory conditions, and some enterprises may have the possibility of moderately reducing the production schedule. In the short term, both the supply and demand sides are expected to be relatively weak, and the sentiment of rubber price decline is heating up.

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