Natural rubber in the first half of the year, the market volatility will rise in the second half of the year into the high-yield period?

- Jun 27, 2019-

In 2019, the natural rubber market broke the boring pattern of 2018. Under the influence of factors such as the reduction of rubber exports in the main producing countries of Southeast Asia, the strong arid climate in the initial production area, and the strict inspection of mixed rubber imports by China Customs, the natural rubber in the domestic market was destocked. The pace has accelerated, and the market has fluctuated in the first half of the year. However, the macro market atmosphere is short, the trade friction between China and the United States has escalated, and the global economic data has fallen. In addition, the demand for the natural rubber terminal market is flat, which is bound to drag down the market. In the second half of the year, natural rubber will enter a period of high yield, the domestic economy is expected to stabilize, and how will the natural rubber market trend be interpreted?

Jin Lianchuang expects that the natural rubber market will continue to be weak and volatile in the second half of 2019, but compared with 2018, the price center of gravity has slightly increased. On the one hand, the customs strictly checked the import of mixed rubber, and the domestic market destocking effect was significant from May to June. The inventory pressure of the natural rubber market was significantly relieved compared with 2018. On the other hand, the arbitrage profit of the rubber market has been greatly narrowed, the arbitrage disk extrusion effect is obvious, and the short-selling of the natural rubber market is also weakened.

Overall, the supply of natural rubber in the second half of 2019 is expected to increase. At the beginning of the 2019 opening, the natural rubber production areas at home and abroad were affected by the high temperature and arid climate, the glue production was insufficient, and the rubber trees were damaged. It is expected that the supply will resume after July. And as the mixed rubber incident becomes clearer, overseas processing plants will adopt corresponding response policies to restore exports to China. In particular, the fourth quarter is the rubber season, so the natural rubber market is abundant in the second half of the year. On the demand side, affected by factors such as economic slowdown and environmental protection, the overall downstream demand for natural rubber in 2019 was flat. “Golden September and Silver 10” was the relative demand peak season. It is expected that demand will recover from late August, boosting the rubber market from August to September. Rebound. The macro market coexists in both long and short terms. The intensification of trade friction has slowed the global economic development and curbed China's tire export and automobile industry demand. However, the economic slowdown has also caused many countries to relax monetary policy, the Fed’s interest rate hike is expected to increase, domestic tax cuts and other fees, etc. In addition, 2019 is the 70th anniversary of China’s founding of the country, and it is concerned about whether China can introduce stimulus policies and focus on macroeconomics around October. In terms of news, can it boost the rebound in the commodity market?

It is expected that there will be a low risk in the natural rubber market in the second half of 2019. It is expected to be around 10,500 yuan/ton in the middle and late November. Because overseas is in the high-yield period of natural rubber, while the downstream demand is weak, the macro-level is also lack of good stimulus.