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Recently, the project application for setting No. 20 natural rubber as a specified future was approved by China Securities Regulatory Commission (CSRC), which indicated that No. 20 natural rubber would became another new type of futures for the international market. |
According to reports, the related policies used for crude oil futures will be copied for No. 20 natural rubber future, which are to take the listing model of “international platform and Renminbi pricing”, to adopt the scheme of clean price transaction and bonded delivery and to introduce foreign traders comprehensively. The No. 20 rubber is the main and most representative variety among global natural rubber industry. The output of global natural rubber is over 12 million tons and about 70% of these are used for tire manufacturing, of which about 80% are No. 20 rubber.
After over 10 years of development, China has become the world largest tire manufacturing country as well as the biggest importing and consumption country of No. 20 rubber. China’s major sources of import include Thailand, Indonesia, Malaysia and other Southeast Asian countries.
The overseas rubber sources increase gradually with China’s enterprises among natural rubber industrial chain speeding up their “going out” paces. These enterprises are estimated to actually control 2.5 times of natural rubber sources abroad than that of domestic sources, among which No. 20 rubber is the leading variety for overseas production and usage. Thus the price risk exposure and business risk these enterprises are confronted with are also increasing.
According to the statistics data, from 2010 to 2017, the top price of No. 20 rubber was RMB 38,205 Yuan per ton, while the bottom price was RMB 6,686 Yuan per ton, the annual average amplitude of which reached up to 53%. Thus the development of No. 20 rubber future will provide enterprises of rubber industry chain with a tool to manage the price risk and help them lock cost and keep interests.
What is noteworthy is that China’s import volume of No. 20 rubber from Thailand, Indonesia and Malaysia accounts for about 80% of its total imports, but this is 57% of the total export volume of these three countries. Thus No. 20 rubber future being listed is conductive to building a pricing system for global natural rubber market.
In the next step, Shanghai Futures Exchange (SHFE) will further make all the preparations for listing No. 20 rubber future, such as contract design and rules argumentation, based on extensive market research conducted under the unified deployment of CSRC, according to SHFE.
