The monitoring shows that, as shown in the figure above, from January to December 2021, the price of domestic natural rubber in China experienced a rapid and sharp rise after the Spring Festival, and then continued to fluctuate weakly. During this period, there was no lack of periodic rise, but the range was relatively small, the duration was short, and did not return to the market height of the sharp rise at the beginning of the year. The overall rubber market in 2021 showed a trend of first high and then low. According to the data of business agency, on January 1, the mainstream of domestic natural rubber (standard I) in China’s East China market was about 13000 yuan / ton, and as of December 31, the mainstream of the market was about 17480 yuan / ton, with an annual increase of about 5.75%; Among them, the highest price in 2021 was about 16287 yuan / ton on February 25, and the lowest price was 12212 yuan / ton on June 21, with an annual maximum amplitude of 25.02%.

Factor analysis:

Figure 3: trend chart of mainstream crude oil market from January to December 2021

As shown in the figure above, on the macro level, the crude oil is advancing all the way in 2021, with a shock rise. According to the monitoring of business agency (100ppi. Com), WTI crude oil surged from $48 at the beginning of the year to $80 in late October, and fell in shock in the two months at the end of the year. As of December 28, WTI had increased by 56.14% and Brent by 51.50%. The core logic of the rise in oil prices in 2021 is basically highly related to the evolution trend of the epidemic. In addition, supply tightening and economic recovery under the macro background of inflation expectations also provide impetus for the rise of oil prices.

First quarter: in January, the spot price of natural rubber showed an upward trend. On the 1st, the mainstream quotation of domestic Baodao whole milk in East China market was about 13000 yuan / ton, and on the 31st, the mainstream quotation was about 130675 yuan / ton, with a monthly increase of 5.19%. Affected by environmental protection, production restriction, epidemic situation and the approaching Spring Festival holiday, the operating load of tire factories continued to decline; Domestic tire enterprises have successively entered the holiday mode. During the seasonal supply shortage, the market of natural rubber fluctuated and rose habitually in the current month. In February, the guiding effect of crude oil was obvious, and the shock weakened after natural rubber rose by 25%. Domestic all latex broke through 16000 yuan / ton on February 25, ranking the high point in three years since 2018, an increase of about 25% over 13000 yuan / ton on January 1, 2021. After the high point, it fluctuated lower. On the 28th, the spot rubber closed at about 15575 yuan / ton, falling below 16000 yuan / ton again. In that month, crude oil was singing all the way, funds were sought after, and the price of petrochemical raw materials rose sharply. From the industrial perspective, the superposition of the lowest supply and the sharp recovery of demand, and the strong spot fundamentals support the rapid rise of the natural rubber market. In March, the natural rubber spot market fell all the way. On the 1st, the price of domestic natural rubber latex was 15375 yuan / ton, and on the 31st, the price of rubber was 13150 yuan / ton, with a monthly drop of 14.47%. Crude oil fell rapidly, transmitted to the manufacturing industry, and the price of basic raw materials fell rapidly; Weak demand in the tire industry. A small amount of cutting is carried out in the main production areas. The market is increasingly worried about the listing of new rubber after cutting. The severe epidemic prevention situation, weak demand and shutdown caused by the lack of “core” of automobile enterprises have insufficient support for natural rubber and weak market.

Second quarter: in April, the spot market of natural rubber fluctuated in a “V” shape. On the 1st, the price of domestic natural rubber latex was 13300 yuan / ton, and on the 30th, the price of rubber was 13407 yuan / ton, up 0.81% month on month. The epidemic situation in Southeast Asia is serious. Rubber at home and abroad has been cut and has a certain supply, which has little impact on the market. Last month, the crude oil led to a sharp rise in the market of related commodities, and the operating rate of tire enterprises was soon helped to rise. The tire output was at a high level in recent five years, and the operating rate remained high in the first half of April; However, since the middle and late days, enterprises have doubled their concerns about overseas market demand, weakened market procurement demand and weakened the market. In May, the domestic all latex Market of natural rubber continued to fluctuate and weaken after a slight increase. The mainstream report on the 1st was 13407.5 yuan / ton, and the mainstream report on the 31st was 12850 yuan / ton, with a monthly decrease of 4.16%. The gradual increase of output, insufficient demand and continuous decline of operating rate are the main factors affecting the downward trend of the market. The supporting role of natural rubber is not strong and the market weakens. In June, the domestic all latex market was weak, showing a trend of first shock down, then up and then correction. On the 1st, the main report was 12875 yuan / ton, and on the 31st, the main report was about 12407 yuan / ton, with a monthly decrease of 3.63%. Crude oil rose continuously in the month, which played a prominent driving role in bulk commodities. The domestic supply is normal, the output increases, the epidemic affects the output and the export is limited. Due to high sea freight and container shortage, the import volume in that month was lower than expected. Domestic inventory is relatively low. The downstream demand is insufficient, the factory orders are poor, the operating rate of tire manufacturers has been greatly reduced, the procurement demand is still weak, and the market of natural rubber in the current month is weak.

Third quarter: in July, the domestic all latex Market of natural rubber rose sharply at the beginning of the month, and then continued to fluctuate in a wide range, showing a “W” shape. On the 1st, the main report was 12370 yuan / ton, and on the 31st, the main report was about 13107.5 yuan / ton, with a monthly increase of 5.96%. In the same month, the output of new rubber in China gradually increased, and the rubber output in foreign Southeast Asian production areas decreased by 4-5% due to the spread of delta mutant strains and rainfall; High sea freight, shortage of containers, export restrictions, recovery of operating rate of tire enterprises and increase of tire output, but there are unstable and uncertain factors in global economic recovery and epidemic prevention and control. The sharp rise in raw material prices further increases the cost pressure of enterprises and the long short game. The natural rubber industry continued to fluctuate in the month and rose at the end of the month. In August, the price of domestic all latex of natural rubber rose and fell significantly, rising first, then rising, and then falling continuously, and the range increased. On the 1st, the main report was 13107.5 yuan / ton, and on the 31st, the main report was about 12697 yuan / ton, down 3.13%. The oil price fluctuated strongly, the output of new rubber was strong, and the epidemic situation led to the decrease of rubber production in Southeast Asia; International shipping costs are rising, containers are in short supply, rubber imports have decreased significantly, and domestic social inventories have continued to decline at a new low. Multinational car orders are less than the expected seasonal increment, resulting in high pressure on finished product inventory and declining demand. In September, the price of domestic natural rubber continued to fluctuate and rise. On the 1st, the main price was 12637.5 yuan / ton, and on the 30th, the main price was about 13815 yuan / ton, with a monthly increase of 4.33%. The flood disaster in Southeast Asia, especially in Thailand, has greatly affected the rubber cutting, and the price of raw rubber has risen; The rising cost of latex in China continues to increase the pressure on rubber processing plants in natural rubber producing areas. The delayed arrival in August is not prominent; Tire enterprises face rising costs, difficulties in domestic and foreign sales, high pressure on finished product inventory, weak tire market demand, poor transmission of tire price increase, and Limited procurement demand.

Fourth quarter: in October, China’s domestic natural rubber prices continued to fluctuate and rise, and turned downward near the end of the month. The mainstream price on the 1st was about 13184.17 yuan / ton, and the mainstream price on the 30th was about 13723.23 yuan / ton, with a monthly increase of 4.09%. Frequent floods in Southeast Asia and rising prices of raw rubber; The output in China is low. The operating rate of automobile manufacturers is low, the demand for raw materials is poor, the inventory pressure of tire finished products is high, the enterprise controls the output, and the operating rate continues to decline. In November, China’s natural rubber market showed a trend of first down, then up and down. The main quotation on the 1st is 13583.33 yuan / ton, and the mainstream quotation on the 30th is 13560 yuan / ton, with a slight decrease of 0.17%; The highest price of the month was 14360 yuan / ton on the 25th, and the lowest price was 13060 yuan / ton on the 4th, with a maximum increase of 9.95% in the month. Crude oil prices fell sharply and the basic raw material market was empty as a whole. Due to bad weather and new defoliation in Southeast Asia, cutting in China has been stopped one after another, resulting in better price support due to reduced supply. The automobile data has picked up, but the recovery speed is not fast. The global terminal market is depressed and the freight industry is depressed. Natural rubber maintained a range shock trend. In December, China’s natural rubber market showed a trend of first down, then up and down. On the 1st, the mainstream quotation of domestic natural rubber (standard I) was 13770 yuan / ton, and on the 31st, the mainstream quotation was 13748 yuan / ton, a slight decrease of 0.16%. China’s natural rubber production areas stopped cutting and accelerated, and the epidemic broke out in Xishuangbanna, which worried the market; In the period of seasonal supply shortage, the output of foreign production areas is mainly. Chinese manufacturers are expected to hoard natural rubber before the week-long holiday of the lunar new year. At present, the improvement of demand port is not obvious, and the downstream finished products are accumulated. The arrival of overseas ships was delayed, the rubber warehousing in Qingdao was insufficient, and the total inventory continued to decrease. The spot price range of rubber fluctuated, and the spot price difference narrowed.

Figure 4: comparison chart of mainstream market trend of natural rubber from 2019 to 2021

On the macro level, the US dollar is potentially strong, with the spread of Omicron COVID-19 mutation and the recent continuation of the crude oil market. In terms of industry, foreign production areas, especially Thailand, are in the peak season of rubber production. Vietnam will stop cutting at the end of January, and domestic production areas will basically stop cutting. Moreover, the recent epidemic situation in Xishuangbanna, Yunnan has a certain impact on the market. The supply is correct, and will be in the traditional low period of annual output, which will also have the strongest support for the market. In terms of import, export and inventory, the arrival of overseas ships was delayed, and the warehousing volume was lower than expected. The general trade inventory in Qingdao Free Trade Zone continued to decline, which also supported the price well. On the demand side, passenger cars have warmed up month on month, and heavy truck matching has not improved; The marginal operating rate of tire enterprises has rebounded, but it is at a low level over the same period for many years. Due to the comprehensive impact of factors such as the plight of the automobile industry due to the continuous shortage of chips, the future market will focus on the weather conditions in Thailand and the demand for factory replenishment before the Spring Festival in China. This period is the period when capital is most easy to mobilize, The upward fluctuation of natural rubber market may be more frequent and may be larger than that in the early stage, but it will eventually be limited by the actual demand of the downstream. For 2022, the industry expects that the impact of La Nina may be limited, and the demand of downstream automobile industry is greatly affected by “core shortage” and epidemic situation, especially the domestic demand for passenger car tires may continue to decline, and the operating rate of tire enterprises is relatively weak; The inventory of bonded rubber in the whole year is lower than the expected level, but the total inventory of bonded rubber in the whole country continues to be at a high level. To sum up, the fundamentals of natural rubber lack obvious big driving force. It is expected that the natural rubber market will fluctuate for a long time in 2022, and the opportunity of long-term absolute turnover has not yet appeared.