Market Review
Prices of RMB-denominated natural rubber spot resources dipped this week. The price of Shanghai natural rubber futures began to fluctuate at lows from April 26, leading to a gloomy spot market. Affected by weak fundamentals, the spot price of RMB-denominated natural rubber waned. On the one hand, with the rubber tapping rate leveling up, the supply of new rubber was expected to pick up. On the other hand, the actual demand from downstream users underperformed. The operating rate at tire enterprises went lower. Sluggish orders of tire products curbed the demand for natural rubber, and stock-up activities ahead of the May Day holiday were limited. Within this week, the buying atmosphere remained insipid, and the spot dealing was sparse.
Market Forecast
China’s natural rubber market will possibly see fluctuations next week. In terms of supply, new rubber may be released gradually in China’s and overseas production areas. Yet, affected by climate, the output release may be slow. Yet, owning to thick enthusiasm for rubber tapping, the output of new rubber may warm up greatly once the rainfall rises and the drought eases. In terms of demand, the downstream all-steel tire industry may face weak domestic sales, so the inventory is likely to pile up gradually. Thus, the support from demand may be limited for natural rubber prices. Thus, on the whole, the output of new rubber may be released slowly in the short run, and China’s spot natural rubber market may continue to destock, underpinning the natural rubber price from the bottom. Yet, the demand may fail to bolster the natural rubber market. In the short term, the natural rubber market is possible to be range-bound. It is estimated that the weekly average price of SCRWF in Shanghai may be RMB 13,450/mt, and its mainstream prices may be in the range of RMB 13,200-13,700/mt next week. Players should pay attention to the climate and output release status in production areas.
Supply: At present, rubber trees in China’s and overseas producing areas are in good condition. With an enlarged rubber tapping area, the output of new rubber is expected to rise. Yet, in the short run, affected by high temperatures and sparse rainfalls, the output may be released slowly. Players should focus on the weather and feedstock output release status.
Demand: Downstream tire enterprises may resume production in succession after the May Day holiday. Thus, the operating rate at tire enterprises may ramp up. Yet, sales of all-steel tire may remain weak in China’s market, leading to pressure of finished production. Thus, the procurement of natural rubber may be limited.
Source: SCI
