The Contradiction Between Supply And Demand Is Suppressing The Price Of Rubber, And The Rubber Market May Be Difficult To Reverse In The Second Half Of The Year

- Jul 02, 2020-

In the first half of 2020, the new crown pneumonia epidemic caused tire companies to continue to operate at a low level, the demand for natural rubber at home and abroad was greatly reduced, and the rubber market continued to slump. The main rubber producing areas are deeply affected by the climate, diseases and insect pests, and the downturn in the natural rubber market. The tapping time has been delayed many times and gradually returned to normal in June. Natural rubber output in Southeast Asia recovered slowly in the second quarter, and output decline supported rubber prices. However, due to the fact that the downstream demand has not yet fully recovered, new rubber is continuously produced in July, and the contradiction between the supply and demand pattern is intensifying. The rubber market in the second half of the year may be difficult to reverse.

In May this year, the world's main natural rubber production areas have entered the cutting season. The weather in the main natural rubber production area in Malaysia is good, and the cut is normal; Indonesia is relatively backward due to economic and medical conditions, and the epidemic situation is severe. The main export areas are concentrated in Europe and the United States, and the low price suppresses the enthusiasm of rubber farmers for tapping; Thailand in late May has frequent rainfall , Which hindered the process of tapping, and the process of tapping returned to normal in June. In China, the rubber tapping work has been delayed due to the influence of climate and powdery mildew. The additives were cut in June.

At present, due to the serious impact of the epidemic situation on rubber demand, the rubber output has been slow to recover due to the epidemic situation in the main production areas and the process of tapping. Southeast Asian rubber-producing countries have cut production. According to ANRPC, the output of ANRPC natural rubber from January to May was 4.0098 million tons, a year-on-year decrease of 7.2%. The continued sluggish raw material prices led to poor willingness for tapping. The output of glue was less than the same period in previous years, and the pressure on supply release was not large.

At present, the demand for rubber has not yet been restored, and the supply of new rubber in rubber-producing countries has gradually returned to normal, especially the new rubber in Thailand has begun to be listed in large quantities; domestic high stocks are about to face a substantial increase; the downstream demand in the second half of the year is slow, and the contradiction between domestic rubber supply and demand is more prominent. Suppressing rubber prices, the rubber market is expected to be difficult to reverse in the second half of the year.