According to the supervision of the Reclamation Bureau of the Ministry of Agriculture, in 2016, the price of Thailand No. 3 ribbed smoked sheet (RSS3) and Indonesia No. 20 standard rubber quickly rose at the beginning of the year, shocked narrowly in the middle of the year and hiked substantially at the end of the year. The price of domestic SCRWF in stock with production and marketing in different places basically followed up the foreign trend and showed the trend of shock, slight uptrend and then rapid rise in the whole year.

In 2017, favorable and unfavorable factors affecting the market price of natural rubber co-exist, it is predicted that the price of natural rubber will shock strongly in a relatively high price range and show a trend of climbing up and then falling dramatically.

1. Analysis of Natural Rubber Market Trend in 2016

From January to mid April in 2016, affected by multiple factors, for example, Thailand collection and storage as well as rubber producing nations in Southeast Asia planned to reduce 615 thousand tons of natural rubber export within 6 months since March 1, the main producing areas in China stopped tapping, and since the tapping time was generally postponed due to low temperature and cold injury, the operation rate of tire and rubber products enterprises went up, the production and marketing volume of automobiles bottomed rebound, the tire export volume slightly went up, etc., the price of natural rubber quickly rose. By April 21, the market price of major sales areas in China reached 12,400 Yuan (price of per ton, the same below), with an increase of 29.17% compared with that at the beginning of the year.

From the late April to the end of August, affected by negative factors such as dollar appreciation, drop in international crude oil price, domestic credit tightening, sufficient supply of natural rubber in stock, seasonal weakening of operation rate of downstream enterprises such as tire enterprises in June and July, sharp rise of inventory and delivery of natural rubber of Shanghai Futures Exchange, etc., the price of natural rubber shocked and fell. By August 31, the market price of main sales areas in China was 10,000 Yuan, with a drop of 19.35% compared with that on April 21.

After September, affected by factors, for example, the price of synthetic rubber constantly rose, rubber tapping in main rubber-producing nations in Southeast Asia was affected by multiple continuous heavy rainfall, the operation rate of domestic tire enterprises went up, the automobile production and sales volume had a yearon-year substantial increase, the rubber import volume had a year-on-year decrease for 5 months in a row, the rubber inventory of Qingdao FTZ constantly fell to a record low, etc., the price of natural rubber constantly rose sharply. By the end of the year, the market price of main sales areas in China was 15,900 Yuan, with an increase of 59.00% compared with that on August 31 and 65.63% compared with that at the beginning of the year.

2. SCRWF Price of Main Producing Areas in China

The average sales price of Yuannan Electronic Commerce Center was 12,964 Yuan, with a year-on-year (the same below) rise of 591 Yuan, and the annual turnover was 33,986 tons.

The annual turnover of Electronic Commerce Center of Hainan Main Producing Area was 26,228 tons, and the average price was 13,137 Yuan.

3. SCRWF Price of Main Sales Areas in China

The average price of Shanghai market was 11,351 Yuan, with a rise of 81 Yuan, the ceiling price was 16,252 Yuan and the bottom price was 9,545 Yuan.

The average price of Qingdao market was 11,299 Yuan, with a rise of 100 Yuan, the ceiling price was 16,248 Yuan and the bottom price was 9,480 Yuan.

The average price of Tianjin market was 11,399 Yuan, with a rise of 25 Yuan, the ceiling price was 16,259 Yuan and the bottom price was 9,625 Yuan.

See Fig. 1 for monthly trend of natural rubber price of main sales areas in China.

RMB/ton

Fig. 1: Monthly Trend of Natural Rubber Price of Main Sales Areas in China in 2016

4. Price Trend of Natural Rubber of Main Producing Areas at Abroad

The average price of Thailand RSS3 was 1,614 dollars, with a rise of 33 dollars. The ceiling price appeared in December as 2,202 dollars; and the bottom price appeared in January as 1,227 dollars.

The average price of Indonesia SIR20 was 1,383 dollars, with a rise of 5 dollars. The ceiling price appeared in December as 1,882 dollars; and the bottom price appeared in February as 1,083 dollars.

The average monthly price of due RSS3 in stock of Singapore Futures Market was 1,626 dollars, with a rise of 64 dollars. The ceiling price appeared in December as 2,201 dollars; and the bottom price appeared in January as 1,219 dollars.

See Fig. 2 for monthly trend of natural rubber price of main producing areas in the world.

dollar/ton

Fig. 2: Monthly Trend of Natural Rubber Price of Main Producing Areas in the World in 2016

5. Import Conditions of Rubber Raw Materials

According to the statistics of the Customs, in 2016, China’s accumulative import of natural rubber (excluding latexes) was 2.0765 million tons, with a decrease of 11.98%; the import of compounded rubber was 159.4 thousand tons, with a decrease of 84.23%; and the import of mixed rubber was 1.8180 million tons, with an increase of 237.73%.

See Fig. 3 for monthly import conditions of three main raw materials.

ton

Fig. 3: Monthly Import Conditions of Three Main Raw Materials

6. 2017 Outlook of Natural Rubber Market

In 2017, favorable and unfavorable factors affecting the price of natural rubber co-exist.

6.1 Analysis of Favorable Factors

Firstly, major oil-producing nations reach output reduction agreement, in 2017, the excess supply degree of crude oil will be relieved, which makes for recovery of international crude oil price and forms support for natural rubber price. Secondly, the synthetic rubber price rises sharply to form upside down with the natural rubber price, thus the substitution role of natural rubber is enhanced. Thirdly, affected by many favorable policies such as domestic quickening of infrastructure construction, “overrun and overload control” of highway trucks, and development of logistics industry, the demand of heavy truck market will still keep a trend of rapid growth. Fourthly, along with depreciation of RMB relative to dollar, the cost of imported rubber will increase and the price will rise.

6.2 Analysis of Unfavorable Factors

Firstly, the rebound of rubber price shores up the enthusiasm of the rubber farmers for tapping rubber, plus the release of newly-added capacity brought about by large-area expansion from 2009 to 2011, the global supply of natural rubber in 2017 will increase. Secondly, from July 2015, the mixed rubber begins to be imported in a large amount in place of compound rubber, thus it is predicted that the import will keep a growth trend in 2017. Thirdly, the discount for vehicle purchase tax in China weakens, thus the growth of production and sales amount of passenger cars will fall slightly. Fourthly, Shanghai Futures Exchange enlarged the capacity of natural rubber delivery storage for many times in 2016 and the current total capacity has reached 517 thousand tons; meanwhile, two deliverable registered brands are newly added, which will suppress the price of the futures.

7. Conclusion

It is predicted that in 2017, the price of natural rubber will strongly shock in a relatively high price range and show a trend of climbing up and then falling.

In the first half year, the domestic macro economy will constantly improve, the production and sales amount of auto tires will still last the trend of last year to maintain a relatively high level, the demand for rubber is strong, while the production of Thailand will be reduced affected to some extent by disaster weather to form support for the price of natural rubber. In the second half year, along with the increase of the supply, the demand growth slows down, and the price of natural rubber will be slightly suppressed.