Metallurgy / Chemicals / Rubber & Plastics

On August 26, the rubber market report issued by the Association of Natural Rubber Producing Countries (ANRPC) stated that the price of natural rubber may rise further as China is expected to increase its purchases in the coming weeks. According to ANRPC, Chinese rubber consumer companies prefer to purchase from domestic warehouses rather than imports, and the total natural rubber inventory in Chinese warehouses has fallen sharply.

According to ANRPC, China is expected to consume about 500,000 tons of natural rubber per month from August to November 2021, and China's domestic production can meet about 115,000 tons. July to November is the peak period of natural rubber production. It is estimated that during this peak season, China’s monthly import demand is 385,000 tons; at this rate, the total demand for the four months from August to November 2021 is estimated to be 1.54 million. Ton.

According to the ANRPC report, Chinese buyers are about to enter the Asian natural rubber market for large-scale imports. It is expected that in the next few months, Chinese buyers will dominate the physical market sentiment. At the same time, ANRPC expects natural rubber demand in the United States, the European Union, the United Kingdom and India to rebound in the short term. Due to the global rebound of the new crown epidemic, low vaccination rates, and government lockdown restrictions, natural rubber production from Thailand, Indonesia, Malaysia and Vietnam is expected to weaken. These four countries together account for 70% of the global natural rubber supply.

Take Malaysia as an example. Although Malaysia has previously issued an official statement stating that it will not impose excessively strict controls on rubber tapping workers and rubber transport workers, it is currently seen that rubber production and rubber transportation are still affected. According to the latest news from the International Rubber Tripartite Council (ITRC), the rubber production in Thailand, Malaysia and Indonesia is indeed being hit by the epidemic, especially Indonesia and Malaysia. ITRC predicts that until the epidemic control measures are relaxed, the total output of the two countries is expected to fall by 4% to 5%. Out of concerns about tire raw material supply expectations, rubber prices have also remained at a high level of 13,800 yuan/ton recently.

In addition, the report added that continued disruptions in global logistics and supply chains, rising shipping costs, and shortages of semiconductor chips may inhibit the recovery momentum of several key industries. Geopolitical issues may also have a negative impact, especially the crisis in Afghanistan after the withdrawal of US troops.