Strong Supply, Weak Demand, Domestic Natural Rubber Market Continues to Weaken

Monitoring shows that on July 20, the natural rubber commodity index was 35.54, a decrease of 0.16 points from yesterday, a decrease of 64.46% from the highest point in the cycle of 100.00 points (2011-09-01), and a decrease of 27.28 from the lowest point on April 2, 2020. Point rose 30.28%. (Note: The cycle refers to 2011-09-01 to the present)

Monitoring shows that the main trend of domestic natural rubber (standard 1) in my country's East China market in the first and mid-July showed a continuous downward trend: the mainstream in the East China market reported about 12,954 CNY/ton on the 1st, and the main report on the 20th was 11,984 CNY/ton, a decrease of 7.49%. Among them, the highest price in the first and middle period was 12,954 CNY/ton at the beginning of the month, and the lowest was 11,970 CNY/ton on the 15th, with a maximum amplitude of -7.6%.

From the macro perspective of industry analysis, in early and mid-July, the trend of international crude oil showed a W-shaped trend, and the current price was comparable to the price at the beginning of this month. Among them, on the 20th, international crude oil futures prices continued to rise. The settlement price of the main U.S. WTI crude oil futures contract was at US$99.88/barrel, a decrease of US$0.86 or 0.9%; the settlement price of the main contract of Lent crude oil futures was at US$106.92/barrel, a decrease of US$0.43 or 0.4%. Affected by the weakening of the US dollar on the macro side, oil prices rose for three consecutive days, and the good news was gradually digested by the market. Oil prices edged lower on Wednesday, as data showed a drop in gasoline at the peak of the U.S. summer driving season and as demand uncertainty stagnated as central bank interest rates raised concerns about an economic slowdown.

Supply side: The output of global production areas continued to increase rapidly. The production of Thailand and Vietnam in Southeast Asia production areas continued to increase. With the rainfall in southern Thailand, the total amount increased steadily, and the price of glue weakened. The output of Yunnan production areas in my country's production areas increased steadily. , Due to the late harvesting in the Hainan production area, the current overall output is definitely lower than in previous years. Judging from the seasonal pattern of global production, it is expected to reach the overall peak in August.

Demand side: Affected by high temperature weather, the operating rate of tire companies has generally declined. Statistics show that the current operating rate of tire factories is about 50-70%. The data shows that as of July 15, the starting load of all-steel tires of Shandong Tire Company was 58.94%, an increase of 1.64% from last week, and a decrease of 0.91% over the same period; the starting load of semi-steel tires was 65.23%, an increase of 1.57 percentage points from last week, and an increase of 0.91% over the same period. 8.85%. The latest data released by the National Bureau of Statistics shows that in June 2022, the output of rubber tire casings in China was 76.98 million, a year-on-year increase of 1.2%; in the first half of the year, the output of rubber tire casings decreased by 7.6% from the same period last year to 417.849 million. Although the automobile consumption policy is frequent and the downstream automobile production and sales are expected to be good, the existing tire finished product inventory is high, and the enterprises are not very enthusiastic about the purchase of raw rubber.

Inventory side: In terms of futures, the natural rubber inventory of the Shanghai Futures Exchange increased slightly, and the inventory of TSR 20 decreased slightly. In terms of spot, it is reported that the inventory of Qingdao Free Trade Zone and general trade has increased slightly, but the overall inventory is not high, and the inventory pressure is not large. Import and export: China imported a total of 536,000 tons of natural and synthetic rubber (including latex) in June 2022, an increase of 16% from 462,000 tons in the same period in 2021; from January to June 2022, China imported natural and synthetic rubber (including Latex) totaled 3.396 million tons, an increase of 3.1% from 3.294 million tons in the same period in 2021.

Market outlook forecast: The recent rainfall in the production areas will not prevent the supply pressure of the global natural rubber seasonal rubber production peak season, superimposed the latest natural rubber import data has increased year-on-year and the inventory of finished tires continues to be high, and the current situation of weak demand from downstream manufacturers will continue. Although the strict control of public health events is conducive to economic development and the frequent occurrence of policies such as automobile consumption has a certain boost to rubber demand, the imbalance of natural rubber spot supply and demand has led to continuous pressure on the natural rubber market outlook. It is expected that the natural rubber market in the third quarter will be difficult to achieve On the rise, the short-term 12,000 mark is likely to continue to fluctuate.