According to the Commodity Market Analysis System of the Business Society, the natural rubber market in China has been fluctuating and gloomy since the end of January 2023. The market remains pessimistic: domestic (Baodao) full latex in East China reported 12250 yuan/ton on January 1, 11260 yuan/ton on April 14, a sharp drop of 1000 yuan/ton in three and a half months, a decrease of 8.08%; Among them, the highest price since 2023 is 12710 yuan/ton on January 30, and the lowest price is 11210 yuan/ton on April 7, with a maximum amplitude of 11.8% during the period. The price of 11210 yuan/ton on April 7 is the lowest in the natural rubber market since the market price reached the lowest level of 11170 yuan/ton on October 31, 2022.

Influencing factors:

Supply side

Firstly, from the perspective of new rubber production. Currently, most of the main foreign production areas of natural rubber are in a period of shutdown; Our domestic region has entered a seasonal cutting period, but Yunnan has severe drought and powdery mildew conditions, resulting in delayed cutting. Hainan has started producing a small amount of glue, and the purchase price of concentrated milk is higher than that of whole milk. The production is not enough to affect the supply side.

Secondly, from the perspective of imports, exports, and inventory. The export volume of rubber from Southeast Asian major producing countries to us has increased year-on-year. Up to now, the import of rubber from major ports in China continues to arrive, while downstream product enterprises have unfavorable orders and purchase as needed. China’s social inventory, as well as the accumulation of natural rubber in the Qingdao area and local bonded areas, continues to accumulate.

Demand side

Firstly, the order cannot keep up. Statistical data shows that in the week of April 9th, the operating rates of all steel and semi steel tires for tire companies in Shandong region increased by more than 13% year-on-year, but most of the previous orders were in the early stages. It is reported that due to late orders not keeping up, the current operating rate of enterprises has decreased compared to the previous period.

Secondly, there is a shortage of car consumption. Ordinary cars: According to the statistics of the China Association of Automobile Manufacturers, from January to March, the production and sales of automobiles in China reached 6.21 million and 6.076 million respectively, down 4.3% and 6.7% year on year, respectively. On the whole, the domestic effective demand of the automobile market has not been fully released compared with the slight decline in the same period. Passenger cars: According to the China Passenger Car Association, preliminary statistics show that from January to March 2023, the retail sales of China’s passenger car market reached 4.275 million units, a year-on-year decrease of 13%; National passenger car manufacturers wholesale 5.021 million vehicles, a year-on-year decrease of 8%.

Future Market Forecast:

Compared to previous years, global natural rubber supply is still at an annual low point. At present, domestic production areas that have reached the cutting season have not been able to cut effectively. However, in the early stage, imported orders for rubber continue to arrive at the port and downstream product factories have insufficient follow-up after inventory consumption, resulting in a continuous accumulation of natural rubber in stock; The operating rate of downstream product enterprises has occasionally increased, but its sustainability is not strong. The trading volume of the automotive/passenger vehicle market has decreased, and the market’s bullish atmosphere is not strong. The market is mainly bullish in the short term. At the same time, there have also been some positive factors in the market, including an increase in tire production in the first quarter, a significant increase in sales of new energy vehicles, as well as better sales from multiple tire factories and an increase in tire prices.

Based on comprehensive analysis, in the future, the natural rubber market will continue to decline in the face of abundant stock and lack of large-scale improvement in demand. If combined with a significant increase in new rubber production in domestic and foreign production areas starting from next month, orders will continue to follow poorly, and the market for natural rubber will eventually be difficult to be optimistic for a long time.