According to Thai news, the current price of latex in the country is around 40 Thai baht per kilogram, and rubber farmers will lose more than 20 Thai baht per kilogram. Dr. Utai, Chairman of the Thai Rubber Growers Association, stated that the local latex prices have been consistently low, compared to around 43 Thai baht per kilogram last month. At present, based on the production cost of 63.64 baht per kilogram, the production cost loss of rubber farmers exceeds 20 baht per kilogram.
In China, the current rubber market is at a relatively low historical level. Shanghai rubber fluctuates in a narrow range, with slight market fluctuations. It was only in the past two days towards the end of the first half of the month that there was a continuous slight decline, and the daily downward adjustment was only about 50 RMB/ton. As of August 15th, the main contract fluctuated around 12,800 RMB/ton, and the market ended in the first half of the month. According to traders, the spot adhesive market has relatively little fluctuation, and latex prices are relatively stable.
According to the data from the Commodity Market Analysis System of SunSirs, the natural rubber market in China experienced a stable and slight decline in the first half of August. Domestic Baodao full latex in the East China market was mainly priced at 12,010 RMB/ton on the first day, and around 11,774 RMB/ton on August 15th, with a half month decline of 1.97%; From August 8th to 13th, the market was almost sideways at the price of 11,895 RMB/ton.
Recent factors affecting the fundamentals of natural rubber:
On the supply side, in terms of new rubber production, during the peak season of global new rubber production, production continues to grow, but the speed may be affected to some extent. Firstly, recent rainfall in Southeast Asia has affected production; Secondly, the prices of latex in major rubber producing countries continue to decline. If Thailand's income security plan cannot change the plight of rubber farmers, it will affect the enthusiasm for rubber production; Once again, natural disasters such as droughts in the first half of the year in China also had a certain impact on rubber production. In terms of inventory, due to the impact of on-demand procurement by downstream enterprises, the delivery speed of rubber spot inventory is slow, and the spot rubber inventory in Qingdao Free Trade Zone is still at a high level: as of August 13, 2023, the total inventory of Tianjiao Bonded and General Trade in Qingdao is 906,200 tons, a decrease of 19,000 tons compared to the previous period, and a decrease of 2.07% month on month. The existing high storage problem of rubber has not been solved, and the supply pressure is still very high. Currently, the overall inventory reduction rate is not as expected.
On the demand side, in the first half of the month, rubber tire manufacturers continued to purchase according to orders, and tire product shipments were relatively stable. From the perspective of type, the operating rate of semi steel tires is at a high and relatively stable level, while the production and sales pressure of all steel tires continues to exist, but the operating rate has increased significantly: in the past week, the operating rate of semi steel tires has increased by 72.03%, with a quarter on quarter increase of 0.28%; The operating rate of all steel tires was 63.5%, with a weekly increase of 7.75%. In terms of automotive data, passenger car manufacturers nationwide wholesale 212,000 vehicles, a decrease of 7% year-on-year and 6% year-on-year; The retail sales of 241,000 vehicles in the market decreased by 1% year-on-year and increased by 9% year-on-year.
On the import side, the RMB/USD exchange rate has recently broken 7.3 for the first time, resulting in high rubber import costs and inverted profits. The pressure on rubber imports will ease.
Regarding the future market, the increase in new rubber and the high inventory of imported rubber have suppressed the upward trend of the rubber market. However, the easing of pressure on imported rubber in the later period, as well as the high operating rate of downstream tire factories and the decrease in finished product inventory, have also hindered the decline of the rubber market. From this, it can be seen that the future market may face a dilemma of ups and downs, and the price of natural rubber is likely to maintain a small range of fluctuations.
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