Weekly Summary: Natural Rubber Futures Price on SHFE Crashed (Jan 17 – Jan 23)

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1  Price

NR Weekly Average Price

dominant contract RU2005

(unit: /mt)

INE

dominant contract

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NR2004

(unit: RMB/mt)

(unit: yen/kg)

Jan 10-

Jan 16

13,212.00 11,022.00 204.90
Jan 17-

Jan 23

12,619.00 10,565.00 196.60
Change -593.00 -457.00 -8.30
Change rate -4.49% -4.15% -4.05%

Natural Rubber Spot Market Price

China Mainstream Market NR Weekly Average Price

(unit: RMB/mt)

Market Shanghai Shandong
Grade SCRWF SVR 3L 3 STR 20  mixed SCR10
Jan 10-

Jan 16

12,370 12,590 14,690 12,000 11,850
Jan 17-

Jan 23

12,038 12,483 14,466 12,029 11,816
Change -333 -107 -224 +29 -34
Change rate -2.69% -0.85% -1.52% +0.24% -0.29%
  1. Market Review

From January 16 to January 22, SCI’s NR Price Index dropped. As of January 22, the index was 531.02, down 18.09 or 3.29% from January 15. This week, NR futures price on the SHFE crashed, because investors acted to avert risks. The conflicts between and supply weren’t prominent. Before the holiday, the amount of trading deposit was raised, which forced many investors to exit the market to avoid risks. Thus, the market moved down. It’s predicted that after China’s Lunar New Year ends, producers will resume production gradually. By then, the rubber will be low. The two factors will effectively support the market. However, without incentive from other factors, rubber market will continue to fluctuate.

This week, NR futures price on the SHFE crashed, because investors acted to avert risks. The conflicts between demand and supply weren’t prominent. The fundamentals didn’t change much. Thailand’s feedstock price dropped from a high level. This week, producers commonly took holiday and suspended production. The transactions of spot almost stopped. Thus, the fundamentals saw no large conflict between demand and supply. Before the holiday, the amount of trading deposit would increase, which prompted investors to exit the market and avoid risks. As a result, NR futures price on the SHFE reached as low as RMB 12,000/mt.

As of January 23, the weekly average price of RU2005 was RMB 12,619/mt, down RMB 593/mt or 4.49% W-O-W. The weekly average price of NR2004 was RMB 10,565/mt, down RMB 457/mt or 4.15% W-O-W.

  1. Market Forecast

Next week, the spot transactions will largely stop due to the Lunar New Year, and downstream producers will suspend production and take a holiday. The trading atmosphere in NR market will become tepid. SCI holds that the fungal disease in Thailand and other major producing countries has reduced the output forecast, which will promote NR futures price on the SHFE to rise sharply and continuously. However, as downstream demand decreases during the holiday, investors exit the market to avoid risks, and some surprise accidents affect the market. All this makes the market price drop, and the market uptrend is broken. SCI holds that the global low output season will effectively support the market. However, without further incentive, the market will fluctuate mostly.

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