The Supply has increased, While the Demand has Weakened. The Rubber Raw Materials have Entered a Downward Channel(January 10, 2025)

Raw materials: At present, the domestic production area of Yunnan has entered the cutting suspension period, the price of rubber raw materials is not available for the time being, and the Hainan production area has also been at the end of rubber cutting, and the price of raw materials is relatively limited in the short term, but driven by the market, there have been signs of a narrow decline in the near future.

At present, the foreign production areas are relatively normal to cut rubber, southern Thailand has entered the seasonal peak production period, and the raw material production is expected to increase relatively obviously, superimposed on the current Thai rubber price, it is still at a relatively high level. Under the stimulation of high prices, rubber farmers are more enthusiastic about rubber cutting, which further lays the expectation of Thai rubber volume. In the northeastern part of Thailand and Vietnam, there is an expectation of postponement of the production stoppage, which to a certain extent alleviates the expectation of production reduction due to the influence of weather in the early stage. As of January 8, the purchasing price of rubber in Thailand was 63 baht/kg, down 3 baht/kg or 4.54% from the end of December 2024. In summary, the weather in the northeast and south has improved and rubber tapping has gradually recovered, maintaining strong production. The supply increment is expected to be strong, and the purchase price of raw materials has accelerated its decline, and the cost support has begun to show signs of weakening.

Inventory: The weather in foreign production areas is gradually improving and Thailand production areas are in the peak production period, the output of raw materials has increased rapidly, the selling of processing plant has improved. Overseas cargo has gradually arrived in Hong Kong, and some of the national storage rubber has gradually entered at the port, so the spot liquidity has increased with accelerated inventory. The supply of overseas production areas is expected to heat up, and the bearish sentiment in the trading market has risen. The natural rubber market has maintained a weak operation under pressure.

Demand: the domestic market demand for semi-steel tires is getting weaker, sales by agents are declining, the purchase demand is low. Although snow tires should be in the peak demand season, the actual demand release is less than expected. Semi-steel tire agents are mainly digesting the existing inventory, taking cautious altitude. Although foreign trade orders have been reduced, but there is still the main support. In terms of all-steel tires, all-steel tires are in the seasonal off-season, and terminal demand continues to weaken. The cost of raw materials continues to run at a high level, which further limits the enthusiasm of factories for production scheduling. The overall inventory level of the enterprise is still lower than the same period in previous years.

Since entering 2025, the price of natural rubber has begun to enter a downward channel. At the supply side, the overseas weather has returned to normal, southern Thailand has entered the peak production period, the output of raw materials is expected to improve, the price of raw materials has declined, and the domestic production area has basically entered the suspension period, so the overall cost side support is relatively limited; The off-season characteristics of downstream consumption is obvious, and the operating rate of terminal tire companies is approaching the end of the year, so may will gradually decline; On the macro front, there is no good news to boost the market, and the market bearish sentiment continues to brew, and it is expected that rubber price will continue to fluctuate and weaken in the short-term.