Monthly Summary: 2020 January NR Futures Prices on the SHFE First Rose and Then Dropped

  1. Review

In January, price on the first rose and then dropped. In early January, ’s central bank injected funds into the market, which boosted the market. In addition, the tense relationship between the U.S. and Iran made the international crude oil prices rising noticeably, which promoted the bulk commodity prices to rebound sharply. From mid-January, as the favorable factors were subsiding and ’s Lunar New Year Holiday was coming, investors exited the market to avoid risks, and NR prices dropped constantly.

In January, RU2005 prices ranged between RMB 13,425/mt and RMB 11,980/mt, and the average price was RMB 12,950/mt, down RMB 27/mt or 0.2% M-O-M. NR2004 fluctuated in the range of RMB 11,210-10,055/mt, and the monthly average price was RMB 10,823/mt, down RMB 144/mt or 1.31% M-O-M.  

In January, rubber prices had lost momentum to rise further. Starting from mid-January, prices continued to drop. Both dealers and producers commonly took a holiday and suspended for the Lunar New Year holiday. Investors exited the market to avoid risks. Both bears and bulls decreased position. Spot prices followed the of futures prices and dropped.

As of the end of January, the monthly average price of in Shanghai was RMB 12,217.65/mt, up RMB 122.2/mt or 1.01% M-O-M.

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  1. Market Forecast

Tire Industry forecast:

All-steel tire industry: SCI holds that the operating rate at all-steel tire producers will hardly rise to a high level in February. The Lunar New Year holiday will be extended and end at February 10 due to the outbreak of coronavirus epidemic in China, which will significantly affect the operating rate at tire producers. Some favorable policies may be launched intensively after the holiday. However, the consumption volume is unlikely to be lifted greatly. Thus, the all-steel tire prices will be adjusted in a small range.

Semi-steel tire industry: Influenced by the black swan accident and the extended Lunar New Year Holiday, the plants will resume production on February 10 or even later. The low demand and the shortage of labors will drag down the operating rate in February. Since there is a shortage of short-range travel and transportation services, the sales in the replacement tire market will hardly turn better. Transactions in February will turn pessimistic. The tire prices will be stable.

Natural rubber market forecast:

SCI holds that the rubber prices will continue to drop in February for the following reasons. Firstly, the resumption of production has been delayed for the outbreak of coronavirus epidemic. The transportation has become a problem. After the holiday, the demand in the NR market will be depressed, and it will take a longer time for the demand to recover. Secondly, the overseas prices of goods dropped during China’s Lunar New Year holiday. Prices at SICOM and TOCOM dropped noticeably. Feedstock prices in Thailand also moved down. All this made the rubber market turn bearish. Now, market players are more interested in how the demand will rebound after Lunar New Year holiday. It’s predicted the rubber prices will continue to drop in February and the support line will be around RMB 10,500/mt for RU2005.


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