The Spot Market is under Pressure, and the Decline of Natural Rubber is Emerging

1、 Upstream output

In the production area of Thailand, there was a downward trend at the end of December. The rainy weather was gradually improved, but the recovery of rubber cutting was slow, and the price of raw materials was still at a high level although there were signs of correction. Its Northeast was in seasonal full production, and the factory raw material inventory was around 3 months, and most of the retail raw material inventory was ready until March/April next year, and the long-term reserve was not yet available. The weather in the south has improved, and rubber cutting has gradually recovered, and the raw material inventory of the factory was of 1-2 months.

The increase in precipitation in Vietnam's producing areas, so the promotion of rubber cutting in some areas was limited, and the purchase price of raw material rubber remained high, but the price of cup rubber has loosened slightly, mainly due to the loss of production profit margins of processing plants and the purchase of raw materials by factories at low prices. At present, there is about 1 month before the production area is stopped cutting rubber, and some processing plants say that they will give priority to 10# rubber and latex inventory under financial pressure, and the specific stop cutting time depends on the local temperature and leaves at the end of the month.

The domestic Yunnan production area has entered the stage of comprehensive stop cutting, the price of rubber is not yet, after the stop cutting, the local rubber farmers concentrated on selling rubber blocks, so some of the raw materials of rubber blocks have been released. The temperature dropped significantly in Hainan production area due to the cold air, so the the rubber forest at the local area has stopped cutting with gradually shrinking raw material output, and the fresh rubber dry content fell to around 20-25, the dry rubber content is generally low. The current rubber production rate declined, so the production cost of the processing plant increased, superimposed falling futures and imported latex market, dragging the focus of raw material acquisition slightly downward, at present, part of the latex processing plant has entered a state of shutdown, it is expected that Hainan production area will be stopped cutting rubber around the end of the month.

2. Downstream production

In terms of all-steel tires, all-steel tires are in the seasonal off-season, terminal demand continues to weaken, domestic and foreign sales and shipments are resistant, and the cost of raw materials continues to run at a high level, which further limits the enthusiasm of factories for production scheduling. As the overall inventory continues to rise, the factory controls the inventory increase through flexible operation through maintenance or burden reduction, and the overall inventory level of the enterprise is still lower than the same period in previous years. There is still more than a month from the Spring Festival holiday, the current production and marketing pressure of all-steel tire enterprises is not reduced. Some enterprises plan to arrange temporary maintenance at the end of the month, while some enterprises continue to control production and in operation until the Spring Festival holiday.

In terms of semi-steel tires, the domestic market demand for semi-steel tires is weakening: Sales by agents are declining with low purchasing demand; Snow tires should be in the peak demand season, but the actual demand release is less than expected compared with the lack of increment in previous years. Semi-steel tire agents mainly digest the existing inventory-based by cautious purchasing, although foreign trade orders have been reduced, but it is still the main support. At present, the production rate of most semi-steel tire enterprises maintains a high level with operating rate fluctuating slightly. The overall output is still at a high level, and sales are slowing down. Most of the enterprises inventory increases, so the production and marketing pressure increases compared with before. But because the inventory reserve is lower than the same period in previous years, the production and operation haven’t been directly impacted.

3. Forecast for the future market

At present, the weather abroad is gradually improving, and the supply of raw materials is gradually rising, so the high price of raw materials is expected to continue to fall, and the support of the cost side has begun to weaken; The tire market supports for the rigid need natural rubber, but it is resistant to high-priced sources; There is still a similar inventory expectation in the natural rubber port warehouse; On the whole, it is expected that the natural rubber market will be weak in the short term.