01Abstract

After a brief rebound in September, the rubber price recently returned to the previous low, the supply level is high and seasonal growth, and the "nine gold and ten silver" demand season is falsification is the main logic of the disk down again, secondly, the domestic and foreign macroeconomic situation also from the perspective of financial attributes on rubber. Looking to the future market, because the spot price is close to the cost of production, showing a certain resistance, or limit the space of the disk to dip, but the short-term demand is expected to be difficult to improve significantly, the supply and demand fundamentals are not enough to support a strong reversal of prices upward, so we believe that the rubber varieties will maintain the bottom of the shock pattern in the next month.

Risk factors: deterioration of global macroeconomic situation, improvement of domestic infrastructure and real estate investment, price fluctuation of raw material glue in producing areas, policy changes of automobile industry.

02I. Review of rubber phase and spot market

In October, due to the failure of the expectation of "nine gold and ten silver" demand peak season, the rubber and spot prices were weakened simultaneously. By the end of 24th, the main contract price of ru and nr fell 1220 yuan/ton or 9.04%, 935 yuan/ton or 9.06%, respectively, compared with the stage high before the National Day. On the spot side, ru delivery full latex fell 550 yuan/ton or 4.53%, nr delivery 20 standard rubber fell 624 yuan/ton or 5.51%. It can be seen that the decline of the two futures varieties is similar, while the performance of the two varieties is weaker than that of the spot, so the basis is stronger in October. Compared with the spot, the performance of No.20 glue is weaker, which is related to the seasonal increase of imported supplies and the low price of overseas raw materials.

03Second, natural rubber fundamental factors analysis

(1) Supply-side analysis

1. Global supply is in an increasing season

According to the latest report released by ANRPC(Association of Rubber Producing Countries), the global production of rubber in September is expected to increase by 3.7% to 1.38 million tons, an increase of 5.1% from the previous month. Consumption of heavenly glue is expected to increase 5.2% to 1.267 million tons, up 6.6% from the previous month. In 2022, global production of heavenly gum is expected to increase by 2.3% year-on-year to 14.376 million tons. Thailand saw a 0.9 percent increase, Indonesia 2.9 percent, China 1.8 percent, India 12.3 percent, Vietnam 1.3 percent, and Malaysia 14.8 percent. Global consumption of heavenly gum is expected to increase by 2.6% year-on-year to 14.786 million tons in 2022. According to the report, falling oil prices, poor global economic outlook and periodic oversupply will have a negative impact on rubber futures and spot prices. Moreover, the rise in the dollar against emerging currencies as a result of the Fed's continued interest rate hikes has also depressed rubber prices, as the currencies of most major rubber producers have weakened against the dollar.

In the fourth quarter, the global production of heavenly glue began to stride to the peak of the year, as the largest consumer of heavenly glue, the import volume of our country increased accordingly. In September 2022, the production of Tiangum in Thailand, Indonesia, Malaysia and Vietnam (unit: 10,000 tons) was 45.11, 26.56, 4.4 and 12.2, respectively. The total output of ANRPC member countries was 1,160,800 tons, an increase of 0.54 million tons compared with the same period last year. According to Longzhong forecast, in September, China's natural rubber import is estimated to be 498,500 tons, compared with the final import value of 490,000 tons in August, an increase of 0.85 million tons.

2. The producing area has good climatic conditions, and the supply quantity and price of raw material glue are loose

The weather forecast shows that the overall rainfall of natural rubber in Southeast Asia in the week of 24th is significantly lower than that of the previous week. The areas with more rainfall are mainly distributed in southern Thailand, eastern Vietnam, northern Philippines, parts of western Malaysia and western Indonesia, and the rainfall in other areas is medium low. The next week will see a further narrowing of wet areas, mainly over small areas of southern Thailand, a few areas of northeastern Vietnam, parts of western Malaysia and western Indonesia. On the whole, the rainfall has a limited impact on the rubber cutting in the production area, but the abundant rain is conducive to the glue output of rubber trees. The supply of raw rubber in the production area is expected to continue to grow, and the price may be further loosened.

At present, the price of raw material glue in domestic and foreign producing areas is in a downward trend. On 24th, the price of Yunnan raw material glue for thick milk is 10,600 yuan/ton (compared with -100 yuan the previous day, the same below), and the price of dry glue is 10,350 yuan/ton (-50), the difference between the two is 250 yuan/ton (-50). Typhoon influence factors are suspended, Hainan glue milk price 10,500 yuan/ton (-300), concentrated latex price 10,900 yuan/ton (-300), the price difference between the two is 400 yuan/ton (0). The price of raw glue in Thailand was 40.8 baht per kg (-0.85) for cup glue and 47 baht per kg (0) for glue on Friday.

3. Thailand, India and Malaysia may join hands to stabilize the rubber price

According to the news from Thailand, October 6, the Director General of the Rubber Bureau of Thailand, Nagong, and Deputy Director General of the Rubber Bureau, Kava Chak, received the visit of Malaysian Deputy Minister of Plantation and Original Industries, DatukRaviMuthayah, and his team. Both sides discussed the cooperation in the rubber industry. The Plantations and Industries Ministry of Malaysia (MPIC) has expressed its intention to promote cooperation between Malaysia and Thailand and Indonesia, the three major rubber producing countries, to jointly establish a minimum international rubber price standard and maintain the stability of rubber prices, so as to safeguard the equality of rubber farmers in the three countries.

The last time the three countries joined hands to "safeguard" rubber prices was the export tonnage plan (AETS), which was launched in April 2019. According to the plan, the three countries need to jointly reduce natural rubber exports by 240,000 tons within four months. But the plan's ultimate practical effect has been limited. According to the analysis of the price trend at that time, the Shanghai glue futures price still fell in shock from April to September 2019, during which it fell by 10% in total. The reason for the decline is similar to the current situation, which is also weak downstream demand and seasonal growth of new glue supply in producing areas, indicating that limited export reduction cannot solve the contradiction that supply exceeds demand in the global rubber industry. And the reduced exports are still released to the market at a later stage, and the long-term supply remains unchanged.

(2) Inventory analysis

Since the Spring Festival holiday at the beginning of the year, the social stock of rubber has been levelling out, and there is no significant cyclical change in the storage and storage. According to Lonzhong Information statistics, as of October 23, 2022, the total stock of bonded and general trade of Tianjiao in Qingdao area is 373,400 tons, an increase of 0.48 million tons compared with the same period last week, a month-on-month increase of 1.3%. The warehousing rate of Qingdao bonded warehouse of natural rubber samples was 7.5 percentage points, an increase of 1.66 percentage points; The outbound rate was 4.31 percentage points, an increase of 0.64 percentage points compared with the previous period; The store-keeping rate of general trade warehouses was 8.45 percentage points and the store-keeping rate 7.59 percentage points, an increase of 0.1 percentage points. On the whole, there was a slight increase in the warehouse that week, and the overall volume of the warehouse declined compared with the previous period.

Futures inventory, overall higher than the same period last year, for the disk has a certain industry short long-term position pressure. On October 24, the Shanghai Futures Exchange RU warehouse inventory stood at 285,790 tonnes, including 52,220 tonnes in Shanghai, 156,300 tonnes in Shandong, 19,190 tonnes in Hainan, 26,430 tonnes in Tianjin and 22,140 tonnes in Yunnan. RU warehouse receipts were down 780 tonnes from the previous trading day and up 73,710 tonnes from the same period last year. The stock of NR warehouse receipts at the Shanghai Energy (600508) Trading Center stood at 38,586 tons on Monday, including 1,492 tons in Shanghai, 35,179 tons in Shandong and 1,915 tons in Hainan. NR warehouse receipts were down 4,011 tonnes from the previous trading day and up 10,483 tonnes from the same period last year.

(3) demand-side analysis

1. Low tire construction and high finished product inventory

After the National Day holiday, most domestic tire enterprises ended their holidays, and the operating rate basically recovered to the pre-holiday level, but the pattern of weak steel and strong semi-steel continued, and the influence on rubber demand was empty, because from the aspects of single tire weight, proportion of rubber in the formula and consumption replacement rate, the driving effect of all-steel tire on the demand for rubber was far more than that of semi-steel tire. In the week of October 20, 2022, the construction data of sample tire enterprises were: all steel tire 52.14%, down 6.77 percentage points from the previous week, down 8.35 percentage points from the same period last year; Semi-steel tire 64.77%, up 0.37 percentage points from the previous week, 8.51 percentage points higher than the same period last year.

　In terms of inventory, in the week of October 21, the available days of finished product inventory of semi-steel tire enterprises were 45.79, up 0.12 days from the previous week and 7.97 days higher than the same period last year; The available days of finished product inventory of all steel tire enterprises were 46.38, up 0.13 days from the previous month and 9.5 days from the previous year. No matter the sales of semi-steel tires with slightly better prosperity or the whole steel tires with lower prosperity deviation, there is a large increase in the inventory of finished products, which has a certain suppression effect on the factory operation. In the later stage, we should pay attention to whether the impulse purchasing behavior of downstream dealers at the end of the year can effectively resolve the current high inventory.

2. Tire export market turns cold

The global economic growth pattern is facing multiple pressures. The data of major economies such as Europe and the United States in recent months show that the economic prosperity and consumer consumption level have declined significantly, and the global tire consumption has also been affected. Therefore, the domestic tire export volume in August and September showed a year-on-year large decline, and the export volume in September was 41.37 million, down 19.48% year-on-year. In the first nine months of this year, the cumulative export volume of rubber tires was 424.89 million, down 2.9 percent year-on-year. At present, the proportion of tire export volume in domestic tire output is as high as 67%, which is the second highest level in recent 8 years, second only to 21 years. Therefore, the change of the economic climate of the export market has a great impact on the production and sales of the domestic tire industry.

3. Heavy truck sales continue to decline sharply

In September, data from CAAM showed that domestic auto sales reached 2,610,300 units, up 25.74% year-on-year and 9.52% month-on-month. Automobile production reached 2.6720 million units, up 28.14 percent year-on-year and 11.54 percent month-on-month. Among them, the sales volume of passenger cars in the month was 2,331,800, with a year-on-year growth of 32.66%; Commercial vehicle sales were 278,600 units, down 12 per cent year-on-year. It can be seen that the growth of car sales is mainly driven by passenger cars, but the commercial vehicle market has been negative year-on-year in eight of the first nine months of this year, with a cumulative decline of 34%. Further breakdown of the heavy truck market, September sales of 52,000 units, down 12 percent year-on-year, January to September cumulative sales of 523,500 units, down 58 percent year-on-year. Although the absolute sales volume of commercial vehicles is less than that of passenger cars, their consumption of tires and rubber is greater. Taking automobile sales data in September as an example, there were 2.33 million passenger cars, which consumed about 11.66 million semi-steel tires, equivalent to about 19,000 tons of rubber. Heavy truck sales of 52,000 units, consumption of all steel tires about 990,000, equivalent to the consumption of about 21,000 tons of rubber.

In addition to new car sales, the operation of the downstream commercial vehicle industry has a greater impact on tires, especially commercial vehicle tires, because one quarter of the consumption of automobile tires comes from the original tires of new cars and three quarters from the replacement tires of existing vehicles. The development of real estate, infrastructure investment, highway logistics and other fields has a direct impact on the tire consumption of commercial vehicles, especially heavy trucks. So far this year, the performance in all of these areas has been poor.

First, housing starts have long been at their worst level in nearly five years this year, and significant improvement is hard to see in the medium term. Second, although the speed of the disbursement of supporting funds for infrastructure projects increased, the speed of the physical workload was slower than the market expected. Third, influenced by the export slowdown and frequent public health events in various regions, road freight logistics data showed a month-on-month decline in the traditional peak season of autumn.

(4) Profit analysis

In the downward correction process of October, the drop of spot and futures prices was greater than that of raw glue, so the production profit of both domestic full latex and imported No. 20 glue shrank and was close to the level of no profit, which means that if the spot price continues to plummet, it will face the rigid support of the cost line. Therefore, whether the raw glue will continue to loosen downward in the later period. Will determine the center of gravity of the disk in the medium and long term.

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　　三、Tianjiao future market outlook

Since the beginning of this year, the rubber price based on the logic of supply and demand of the seasonal law is very obvious: in the beginning of the low production price is high; After the Spring Festival, as the demand falls back and the opening season approaches, the price starts to fall; Later, due to the overall good wind and rain in the main producing areas, the new glue production in the opening season gradually increased and the global opening area was at a historic high. The market expected easy supply and the price went down all the way. The arrival of the traditional demand peak season in September, the disk started to rebound and test upward, but then demand improvement expectations falsified, the price fell again in October. According to the rule of previous years, the fourth quarter rubber prices continue to decline the probability of low. After late November, domestic production areas will stop cutting one after another, and the domestic glue supply will gradually withdraw from the market. Indonesia, the second largest producer of glue, will stop cutting from September to November at the same time. Although the booming production season of Thailand, Vietnam and other countries will run through the fourth quarter and extend to January and February of next year, the global supply will continue to peak in the next three months. But the production area of raw material rubber price resistance will often be highlighted at this time, and then bring support to the plate. Especially considering that at present, rubber production profits have been in a state of slight profit, spot continues to fall or will weaken the willingness of rubber factories in producing areas to start work, and then reduce the supply of commodity rubber. From the basis point of view of the joint movement of futures and spot, October basis has been stronger, so short-term futures or affected by macro factors temporarily over spot, but the space below is expected to be limited by the cost line. Therefore, we believe that rubber prices in the next month will still be the bottom of the shock pattern, above continues to face weak demand pressure, and below is also getting support from raw material costs. Key risk factors to focus on are the deteriorating global macroeconomic situation, the improvement of domestic infrastructure and real estate investment, the price fluctuations of raw material glue in producing areas, and policy changes in the domestic automobile industry.