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Bear to cow? 2019 rubber industry has more variables


In 2019, the global supply of natural rubber is still in surplus, but it is necessary to pay attention to the impact of El Niño on the opening of the main producing countries and whether the supply and demand gap in India will be enlarged. For China, whether or not to go to the warehouse next year depends on the change in import volume. The narrowing of the current price difference is expected to lead to an accelerated decline in imports, thus ushering in the storage cycle. In addition, the strength of domestic destocking and the current price difference in the first quarter of next year may affect the market for one year.

Core view

Global production is expected to reach 13.72 million tons, and demand is expected to be 13.48 million tons, still in the passive replenishment range. If the impact of El Niño increases next year, and the low price makes the employment of the cut-off period difficult, and the output of Thailand will drop significantly, the supply and demand structure will improve.

In 2018, India’s supply and demand gap will be enlarged to 600,000 tons. If the Indian economy plays a good role in 2019 and the supply side remains reduced, the supply and demand gap is expected to further enlarge, and global supply and demand is an important variable.

China’s demand side is expected to grow at a rate of 3% next year. The main variable depends on imports. The current price gap will return to a low level and the import growth rate will drop sharply. When the import growth rate drops by 5.5%, domestic supply and demand will be tightly balanced.

In the first quarter of next year, the whole period is expected to rise, and the operating range of the whole year depends on the strength of the first quarter destocking, the current price difference structure and the impact of foreign cutting. Hujiao has a monthly operating range of 9000-15000, unilateral and current operations. See the text for details.

After the 20# rubber is listed, it can lay out long lines and multiple orders.

2018 market review

Looking back on 2018, rubber is still a year of falling. The main price has dropped from 14500 at the beginning of the year to nearly 10,000 yuan in the middle of the year. Huge supply and demand pressures and macroeconomic internal and external problems are the main reasons for the continuous decline. This year, rubber has experienced two sharp declines. First, on March 23, the United States launched a tariff increase on imported goods from China. Secondly, on June 13th, 20# standard rubber was filed by the China Securities Regulatory Commission. This wave plunged until a long period of time before the 1809 contract was delivered, and it was at a low level. Since then, the main force has changed to 1901, and the center of gravity has risen. On August 21st, Hujiao, which experienced a long period of plunge after Hujiao’s decline, ushered in a daily limit due to weather conditions in the production area and downstream modified asphalt incidents. Driven by. It can be seen that rubber is currently at an absolute low price and has a certain long-term investment value, but the macroscopic surface of the huge inventory that has been underperforming makes the upward driving force weak.

2019 global supply and demand is still surplus

(1) The growth potential of the supply side is still large

Cutting area maintains rapid growth and potential production capacity is huge

Global rubber production capacity is still in the cycle of increasing production. First of all, from the perspective of cutting area, the high price of the last round of 2010-2012 triggered a large-scale increase in production. According to the gum tree, it was opened in 7 years, and it was still in the peak of production increase in 2019. The area of ​​open cut in 2019 is calculated. The area of ​​open cut = the area of ​​open cut in 2018 + the area newly added in 2012 – 2018. It is calculated that the newly opened area in 2019 is still increasing. As for the trend of new crop area increase, the growth rate of open cut area will slow down in 2020, but since the rubber production season is 10 years old, the new open cut area will slow down after 2020, but the production capacity will be slower. It is still very large, and production may experience negative growth after 2022. Of course, if the price is too low, it may lead to the phenomenon of tree felling, and the area of ​​cutting may have a negative growth in advance. The price was low in 2008~2009. The most serious cases of felling rubber forests were Thailand and Malaysia. Among them, Thailand was cutting down small trees that had not been cut, while Malaysia was cut down by a large number of other agricultural and industrial industries. Gum trees have a greater impact. Generally speaking, due to the small investment in the late stage of tapping, it is generally not possible to cut trees, and only choose to abandon at low prices.

In addition, judging from the age structure of the tree, the current tree age structure in Thailand is good, and the proportion of small trees under 7 years is high. The 7-year-old tree-aged rubber trees account for a relatively stable period, while Vietnam has increased the number of rubber trees in recent years. The proportion of gum trees in the age of -27 years is increasing. Such a tree-age structure makes the supply potential large, and some rubber trees that are discarded due to low prices can be added to the cutting line.

In addition to the statistics of the opening areas of major countries, the production capacity of some emerging rubber producing countries has not yet been fully calculated. For example, in Côte d’Ivoire, Africa, the annual output has reached 500,000 tons. In addition, the capacity of emerging countries in Laos is increasing, and such The labor cost of the emerging rubber producing countries is low, and it can make up for a certain major producing country to reduce production when the rubber price is low.

The price is low and the weather is affected, and the yield is expected to decline.

In addition, the important factor affecting production is yield. Generally speaking, the yield will be affected by weather and price. The effect of weather on tapping is fast and obvious. Generally, the weather is the most favorable for tapping. The drought makes the gum grow slowly and may be delayed. And shortening the tapping period, in addition to the lack of water, the glue production and regeneration rate are reduced, and the yield is reduced.

From the rainfall in Thailand this year, the rainfall from August to October is lower than the average of the past six years, especially in August-September. In addition, according to the report of the World Meteorological Organization, the El Niño phenomenon will have a 75-80% probability in the next few months, and will also be in the spring of 2019. It is especially important for the growth and development of gum trees in the 3-5 months of the rubber season in Thailand. The drought in this period will lead to the slow growth of gum trees and affect the cutting. Historically, the El Niño phenomenon occurred from July 2009 to October 2010, and drought occurred in many parts of Southeast Asia. The yield of natural rubber in Indonesia, Vietnam, India and other places decreased significantly, and the output of Indonesia showed a 15% decline. In addition, the strong El Niño phenomenon in 2016 delayed the opening time of China and Thailand’s production areas by 15-30 days.

In addition, the low price will lead to lower yields. In theory, the minimum per capita wage in Thailand is about 350 baht per day. According to the annual tapping capacity of each person, the minimum price of glue should reach 6 yuan/kg, or 40 baht/kg. Below this price, abandonment occurs significantly. Since the end of this year, the price of glue in Thailand has been below 40 baht, even reaching 34 baht, and the phenomenon of abandonment has occurred. In addition, domestically, Hainan tapping rubber has the highest labor cost, and the cutting rate is at a low level, and the total domestic output is expected to decline.

From January to September this year, the output of ANRPC was 8.555 million tons, up 0.4% year-on-year. The proportion of this increase was seriously lower than the expected 3-4% at the beginning of the year. On the one hand, the production was reduced due to the weather, including India and Vietnam. Production is expected to be flat this year. According to the output ratio of the first three years and the fourth quarter, the output of the fourth quarter of this year is forecasted, and the annual ANPPC production is 11.8 million tons, with a growth rate of 0.2%, which is basically the same.

2019 production forecast

According to the output performance this year, the average yield in 2018 is calculated, and the yield in 2018 = (2018 production * 2017 cutting area) / (2017 production * 2018 opening area) * 2017 yield, expected rubber price Without a significant improvement and the expected impact of El Niño, the 2019 production forecast for the 2019 countries will continue, and the total ANRPC production is expected to be 12.35 million tons. ANRPC accounts for around 89% of global production, and global production is expected to reach 13.72 million tons. Of course, this is based on the calculation of the yield this year. If the impact of El Niño is aggravated next year, and the low price makes the employment of the cut-off period difficult, the output of Thailand will drop significantly, and the overall output impact is very considerable.

(2) There is no significant increase in demand side

The downstream of natural rubber is mainly for the automotive industry. Due to the economic impact, the global GDP growth rate and the growth rate of rubber consumption show a strong correlation. It can be seen from the relationship between the two that from 2013 to 2017, only in the period of 2009-2010, due to the subsequent impact of the economic crisis, the natural rubber consumption has experienced large fluctuations. In other years, the growth rate of natural rubber consumption fluctuated around the global GDP growth rate. In recent years, as the global economic growth rate has stabilized, the growth rate of natural rubber consumption is slightly smaller than the growth rate of GDP.

According to the IMF’s forecast, the US and China’s economic growth rate this year is 2.9% and 6.6%, respectively. The slowdown is expected to be lower than 2.5% and 6.2% next year. In addition, the Eurozone, Japan and the United Kingdom have been lowered in 2018. In addition, the two major regional trades, the North American Free Trade Agreement and the European Union are changing, and US tariffs on China may also damage existing supply chains, leading to weaker trade activity. The IMF predicts that the global economic growth rate will be 3.7% in 2018-2019, and the demand growth rate is expected to be 2%. It is predicted that the global natural rubber consumption growth rate will be 13.48 million tons in 2019.

(3) Global supply and demand is still loose, focusing on marginal variables such as India

Global supply and demand balance, still in the passive replenishment cycle

According to the above forecast of supply and demand, in the absence of variables in 2019, the global supply of natural rubber will still exceed demand, and the inventory will still be in the passive replenishment structure.

Focus on the needs of developing countries such as India

India is a country with rapid economic growth. According to the IMF, its GDP growth rate will remain above 7% in the next five years, while India’s natural rubber consumption is very low. In 2017, India’s per capita annual consumption of natural rubber. 0.8 kilograms, while China has reached 3.8 kilograms, India has great potential for natural rubber demand. In contrast, India’s rubber production is in a continuous decline. In 2018, due to the flooding during the high-yield period, the production has dropped sharply. The Indian Rubber Authority has lowered the rubber production target of 2018-19 from 700,000 tons. To 600,000 tons, the agency expects India to import 600,000 tons of rubber this year.

According to the aforementioned balance sheet, global supply and demand will still have a balance of 300,000 tons. If the black horse in India is killed and the increment of several hundred thousand tons can be expected, then the turning point of the supply and demand pattern will come early, of course, in the balance of supply and demand. The table already contains some of India’s contribution predictions for demand. If you want to change the marginal supply and demand, India must have super-bright performance on the demand side.

Domestic demand is weak, high stocks are slowly digested

(1) The current premium is declining and domestic supply tends to weaken

This year, the domestic glue price has been at a low price. After November, the glues in Yunnan and Hainan are all below 10 yuan/kg. It is difficult for employees to use glue to cut rubber. Especially for Hainan with high labor cost, this year’s cutting rate is low. The domestic raw material output declined, but the domestic production remained at 800,000 tons a year. The impact of raw material reduction was also small. In addition, the amount of smuggled raw materials imported from Vietnam and Laos increased, so the domestic rubber production did not decline. In the previous period, the stocks were removed from the warehouse, and the performance was gradually increased. The output this year is estimated at 805,000 tons, the replacement planting index is about 200,000 tons, and the border smuggling volume is tens of thousands of tons.

In the case of stable downstream consumption, the main intrinsic driving force of natural rubber imports is arbitrage demand, so the current price difference is the main reason for determining domestic imports. From the perspective of supply-side drivers, China’s main source of imports is Thailand, so Thailand’s production and exports are crucial. As can be seen from the figure, Thailand’s export data is leading domestic imports, and the impact of Thai exports on China’s imports is mainly reflected in seasonal supply and demand analysis.

The strength of the current price difference has a greater impact on the annual import. In the second half of 2017, the current price spread has risen sharply, which has led to a sharp increase in import demand. It has also opened the arbitrage window of tobacco sheets. In June 2018, the 20# standard rubber market was approved by the China Securities Regulatory Commission, resulting in a sharp narrowing of the distant moon. And the low price of the absolute price leads to an increase in the enthusiasm of the downstream receiving goods, and the inevitable weakening of the current price spread to promote the receipt of the insurance. From June onwards, the difference between Hujiao’s main force and mixed rubber base is basically below 2000, which is far from the basis of more than 3,000 last year. The arbitrage disk has not had a chance to increase the position, the capital occupancy is low, and the basis difference gradually narrows in the second half of the year. The arbitrage disk began to close. However, as the current price spread narrows, the market expects the second round of price differentials to accelerate, and may be in a low-up normal state in the later period. As a result, the current set of positions has been continuously reduced, and the operating mode is changed from the higher the price difference. Low position.

The change in the hedging model from the current price difference is the smaller the jiacang becomes smaller and the more jiachang changes reflect the market’s expectation of narrowing the moon’s premium and shortening the return time. This change is obviously good for the excessive import of rubber. The low position of the round is still profitable due to the shortening of the return time. However, when the premium is small, it becomes the normal state. When it is below 1000, the trader with a fund interest of about 6% will not be able to intervene. The narrowing of the current price difference will become the key to the decline in domestic demand and the return to the fundamentals.

From January to October, China’s natural rubber (standard rubber, tobacco sheet rubber, hybrid rubber and composite rubber) imported 3.88 million tons, an increase of 3% year-on-year, including 189,000 tons of tobacco imports and 1.284 million tons of rubber imports. 2.393 million tons, 98,000 tons of composite rubber imports. It is estimated that the annual import growth rate will be 3%, and the total amount will reach 4.93 million tons. According to the above, the supply for the whole year of 2018 reached 5.93 million tons. In 2019, given the narrowing of the current spread and the weak domestic demand, imports are expected to be flat or even negative.

(2) Tight supply and demand balance, 2019 import growth rate becomes the key

In 2018, the overall performance of China’s tire consumption was not good. From the perspective of supporting tires, automobile production and sales have entered the downward channel. The output of passenger vehicles has dropped significantly, and the production and sales of heavy trucks are difficult to maintain. In 2019, automobile production and sales are expected to increase by zero. From the perspective of replacement tires, the economic growth rate has dropped significantly, and the performance of real estate and logistics and transportation industry has been poor, which has led to a weakening of replacement demand. In addition, trade friction with the United States and Europe has caused premature overdrafts and declines in tire exports. If the tariffs imposed on the United States in 219 are increased, it will have a greater impact.

In 2018, the production and sales of tires showed a significant decline. From January to October, the output of rubber tires was 710 million, a decline of 11.3%. In the first nine months, natural rubber consumption was 4.184 million tons, a growth rate of 3.4%, and the annual growth rate is expected to be around 3%. It can be seen that the growth of natural rubber and the growth rate of tire production showed a very strong correlation before 2016, but the tire production began to decline in 2017 and the consumption of natural rubber remained stable. Correcting the reasons, on the one hand, the structure of the tire changes, the proportion of radial tires continues to increase, while the proportion of bias tires, bicycle tires, engineering tires, etc. continues to decline, the meridian rate of China’s tires has increased from 45.4% in 2009 By 2017, 72.5%. In addition, the development of non-tire rubber products is also a bright spot for future development. Comprehensive assessment, in the absence of policy stimulus in 2019, natural rubber consumption is expected to maintain a growth rate of around 2-3%.

According to the above analysis, we make neutral, optimistic and pessimistic different reasonable assumptions about the growth rate of imports and consumption. Then, when the import growth rate is reduced by 5.5% and the consumption end is maintained at 3% optimistic scenario, China’s supply and demand are tightly balanced. In other cases, There will still be a cumulative library.

(3) There is no bright spot in the production and sales of tires, and the demand for products is partially increased.

Poor production and sales of automobiles, decline in demand for supporting tires

Heavy trucks performed better than expected in 2018, with sales exceeding 1.45 million in January-November, which was the same as last year. The surge in construction vehicles in the first half of the year drove the increase in the sales of heavy trucks, and it has fallen sharply since then, but natural gas heavy trucks have brought new growth highlights since September. The performance of natural gas heavy trucks is mainly due to the heating stimulation in winter, the road coal transportation market is picking up, and it is also affected by factors such as rising diesel prices and clean energy commercial vehicles promoted in some regions. Looking ahead to 2019, the super good performance of heavy trucks brought about by the Governance Policy and the replacement cycle is expected to end from 2016, and real estate is expected to weaken the driving of construction vehicles. However, it should be noted that on June 25, 2018, the Ministry of Communications proposed to vigorously eliminate old vehicles. By the end of 2020, the Beijing-Tianjin-Hebei region and the surrounding areas will eliminate more than 1 million medium-heavy diesel trucks operating in the country and below. This may bring Come to a new round of heavy truck replacement needs. Overall, heavy truck sales in 2019 will begin to turn heads down.

The passenger car is even more pessimistic. Since the second half of 2018, the sales volume of passenger cars has dropped sharply. The cumulative sales volume of 1-11 is 21.28 million, down 3.6% year-on-year. The reason for the sharp decline was the purchase tax preferential policies introduced in the previous two years, overdrafting some sales in 2018, in addition to the uncertainty of import tariffs and the increase in refined oil prices. The performance of the passenger car market in 2019 is not optimistic. Passengers are expected to be flat or down in the previous year, spurred by weak economic expectations and no obvious favorable policies.

Long-term negative replacement market for the railway

The poor replacement market in 2018 is the main reason for the poor demand for domestic tires. On the one hand, it comes from the increase in the number of heavy trucks, but the main reason is that the decline in vehicle attendance due to the decline in supply has caused tire wear to slow down. After 2016, heavy-duty truck sales increased significantly, with sales of 1.82 million units in 16-17, bringing the total holding capacity to around 6 million units. The poor macro economy, the decline in road freight transportation and the restriction of environmental protection and production have all led to a decrease in supply, a decrease in single output, and a slower wear.

The amount of road freight directly determines the replacement demand, and has a strong positive correlation with tire production, and the growth rate of general road freight volume is higher than the growth rate of tire production. This year’s road cargo turnover and road freight volume growth have been steady and kept at a low level, while the growth rate of railway transportation has increased. Recently, the State Council issued the “Three-Year Plan for Advancing Transport Structure Adjustment (2018-2020)”, which calls for the promotion of bulk cargo transportation, “transfer of iron and public water”. By 2020, railway freight insurance will be increased by 1.1 billion tons compared with 2017, and waterway freight transport will increase by 5. Billion tons, the road freight of coastal ports decreased by 440 million tons. In 2017, the road freight transportation was 36.8 billion tons, and the reduction of 440 million tons was small, but it did not rise and fall. Considering the increase in the number of heavy trucks, the replacement demand is bound to decline again.

Trade frictions continue, exports are seriously declining

From January to October 2018, tire exports were 400 million, a slight increase of 1% year-on-year. The decline in tire export growth was mainly due to the trade war between the United States and the European Union. On September 24, the United States imposed a 10% tariff on 200 billion products originating from China, including tires. After the implementation of this policy, due to the expectation of a 25% tariff increase on January 1, 2019, China and the United States traders have carried out a large number of export operations. From the chart, it can be seen that the United States imported car passenger tires from China this year. Maintaining a high growth rate, it is understood that some US tire traders have reached inventory in March 2019. In order to stimulate domestic exports, China’s export tax rebate policy has been adjusted. From November 1 this year, the current export tax rebate rate will increase, and the export tax rebate rate for tires will increase to 9%, which will increase export profits. 1% will stimulate the export. Therefore, as a whole, the impact of the 10% tariff is basically hedged, but the impact of 25% is difficult to compensate.

For the export market next year, the first quarter is obviously not optimistic. This year’s rush to export has overdrafted some of the export demand. On December 1, 2018, at the G20 summit, China and the United States reached a consensus, giving a 90-day renegotiation period. The 25% tariff increase originally scheduled to be imposed on January 1, 2019 is expected to be cancelled. Exports started in the second quarter will be better, depending on the outcome of the negotiations.

Product development potential

The application research of natural rubber has been concentrated in the tire industry. However, due to the development of the tire industry and the economics, the current development has entered a stable stage, and it is difficult to increase significantly. The application in the product industry has broad prospects, and building cushioning materials may be applied in the future for some time to come. At present, the global supply and demand structure of natural rubber is close to balance, and the increase of the future product industry may be the key to the transformation of supply and demand structure. As far as China is concerned, tires account for 78% of natural rubber consumption and about 22% of products. However, due to the stable development of the automotive industry and the poor demand for replacement tires, tire production has declined. The consumption of rubber also has a certain drag, and its growth is mainly due to the growth of application in products. From January to September this year, the growth rate of natural rubber consumption of products was above 10%, and the growth rate of natural rubber consumption of latex products was also around 5%. Therefore, this aspect cannot be ignored in the long run.

(4) Tight supply and demand balance, it is expected to enter the slow de-banking interval

The periodic accumulation of rubber in this round has not ended in 2018. The stocks in the previous period are in continuous accumulation, and the stocks in Qingdao are all in high stocks. The main driving force is the arbitrage, which leads to a large surplus of domestic stocks. Then combined with the 20# standard glue, the probability of listing will be listed next year. The current premium is greatly weakened, and the domestic import drive is declining. Combined with the aforementioned supply and demand analysis, it is expected that the inventory will decline next year.

Operational guidance and advice

(1) Current price trend analysis and operation guidance

The current rubber price is a difficult position to operate. The main contract price of 1901 is about 11,000, and the spot price is about 10,000. The difference from the historical low is really small. The low price of raw materials makes the rubber farmers in the production area complain, so the short price is expected at this price. The benefits are small.

The next year’s mid-term market deductive path can be divided into several situations to discuss: First, the inventory in the first quarter has declined, and the current price center has risen, but because the market’s bearish sentiment is still heavy, and the bulls are weak, The 20th rubber is expected to wait for the market to be listed. The futures price will not increase significantly. The spread will not be able to expand. The long-term premium will remain at several hundred. It will not even cover the arbitrage position cost, slowly reduce the supply, consume domestic stocks, and steadily stay at the bottom. The annual operating range is 10,000-13000. The second is that the domestic de-stocking in the first quarter of next year is poor, but the macroeconomic and other disturbances also lead to the rise of the rubber operating price range, and the weather is less affected during the opening season, then the current arbitrage will be re-stocked, the rubber price will Looking for the bottom again, the trend is high and low, and it is expected to break 9000 in the third quarter. In another case, in the first quarter, the domestic delisting efforts were relatively strong, and the foreign countries were affected by the El Niño phenomenon, the opening and cutting were delayed, and the low price caused the employees to work hard, which seriously affected the cutting, then the futures price quickly rose (also showed In the case of a substantial increase in positions, the ratio of false to real increases, while the current set is due to the reduction of the target or the risk of margin, do not dare to increase or partially explode, which will also lead to weakening of arbitrage demand, rubber year-round price can be expected . Hujiao near-month contract running range is expected to be between 11000-15000. In view of the probability of occurrence of the above three cases, the first type is considered to be the largest and the third is the smallest (recommended on the right side).

On the one-sided operation, most of the production areas in the first quarter were cut, and the narrowing of the current price difference also reduced the supply pressure. In the second quarter, attention should be paid to the de-stocking efforts in the first quarter and the situation of foreign production areas. The situation can be high-low and low-sucking in the first place, and the high-altitude thinking is the main case in the second case. In addition, it should be noted that a major obstacle to the current rubber shortage is the loss of the shift of the distant moon. Once the 20# standard rubber is on the market, it is much simpler to do more.

In the current aspect, the first and second cases can be added at a high position, and due to the expected listing of the 20# standard rubber, the current price difference may return early. In the third case, it is recommended to be cautious, to prevent the current explosion (focus on the opening and cutting information of the production area, changes in positions, etc.).

Cross-variety, you can pay attention to the disk arbitrage between 20# standard glue and Hujiao.

Translated by Google Translator from http://www.cria.org.cn/newsdetail/47781.html

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