Monthly Report: March China NR Prices Slumped
1．Market Price
|
SHFE & TOCOM NR Futures Closing Price |
||
|
Dominant Contract at SHFE (unit: RMB/mt) |
Benchmark Contract at TOCOM (unit: Yen/kg) |
|
| 28-Feb |
13,030 |
193.80 |
| 30-Mar |
11,290 |
184.00 |
| Change |
-1,740 |
-9.80 |
| Change rate |
-13.35% |
-5.06% |
2. Market Review
SCI NR price index slumped in March 2018. As of March 30, the NR price index was 456.83, and it totally decreased by 71.70 this month.
The NR dominant contract at the SHFE plunged and hit a new low since September 2016, with the price dropping by RMB 2,000/mt to RMB 11,000/mt. The rubber tapping in Yunnan producing area started earlier than expected, prompting players to concern the supply in the coming market. The main reason for the price slump was the U.S’s trade investigation upon China. Worries on the trading between China and the U.S. were triggered, leading the prices of many commodities to fall. The NR futures fluctuated around RMB 11,000/mt after experiencing a limit-down.
Up to March 30, the dominant contract price at the SHFE closed at RMB 11,290/mt, down RMB 1,740/mt or 13.35% from last month.
In March, NR prices fell sharply by RMB 1,000-1,800/mt from last month. The prices of delivery products and non-delivery products decreased by RMB 1,600-1800/mt and RMB 1,000-1,200/mt respectively. In the first half of the month, the trade disputes between China and the U.S. escalated. The bearish macroeconomic environment dragged down the overall prices of commodities, leading the NR futures to decline dramatically. In term of fundamentals, the downstream demand recovered slowly, and the plants replenished cautiously amid a fairish trading atmosphere. The earlier started rubber tapping in Yunnan producing area placed further pressure on the already high inventory level. Under multiple bearish influences, the NR futures fluctuated at lows after the slump.
As of March 30, offers for the 2016 state-owned SCRWF in Shanghai were RMB 10,450/mt, down RMB 1,800/mt or 14.69% from last month. The highest and lowest prices were about RMB 12,200/mt and RMB 10,400/mt respectively.
3. Market Forecast
Downstream market forecast:
Traditionally, the tire output remains high in April. SCI holds that the operating rate in the all-steel tire industry may rise in April. With the replenishment of labor forces, the capacity is likely to be released greatly. However, sales in the replacement tire market are insipid after the Spring Festival, and holders still face selling pressure. So the increment of tire inventories may curb the capacity release. As a whole, the overall operating rate in the tire industry may be stable-to-rising in April.
Natural rubber market forecast:
Currently, the NR market is weak. The fundamentals lack strong driving factors. The rubber tapping will start in Yunnan and Hainan. The demand for tires is insufficient in the Chinese domestic market, and the export orders are impacted by the international trade competition. The imbalance between the supply and the demand results into bearish expectations in the market. Thus, the NR futures price at the SHFE may still face downtrend in the future. The NR price is in a bottoming process and also at a turning point of the destocking cycle in the industry chain. The NR market will still be mainly supported by the fundamentals. The NR dominant contract at the SHFE shifts to RU1809, so the market pressure may be high in August and September. When NR price drops to a low level, the cost of rubber tapping will have a greater influence on the market. So the NR price may drop limitedly in the near future. The contract RU1809 may hover at around RMB 11,500/mt, and players can try short selling when the prices rebound.
Source: http://intl.sci99.com/n/4/543448.html
