Rubber market trend Calm: Rubber supply and demand gap still exists
Zheng Wenrong, secretary-general of the Natural Rubber Association, believes that since the price of rubber fell continuously in the past five years, if the price of glue continues to go down, no one will go to tap. Since the beginning of last year, the enthusiasm for rubber tapping has become increasingly depressed, and new rubber resources have become less and less, but the demand for rubber has not been reduced. Therefore, the shortage of supply is inevitable.
According to Rubber Economist, an industry consulting agency, global natural rubber production will not be sufficient to meet demand, and global inventories will be further reduced. The output of natural rubber alternative synthetic rubber cannot satisfy demand in the past three years, and this trend is expected to continue. In 2016, the global production of natural rubber was less than 11.6 million tons and the consumption was 12.5 million tons. In 2017, the output is expected to be less than 12 million tons, and the consumption is expected to exceed 12.6 million tons or more.
At the recent 2017 China Rubber Annual Conference, the president of the China Rubber Industry Association, Deng Yaxi, pointed out that in 2017, the total consumption of rubber in China is expected to reach more than 9.6 million tons, an increase of about 4% year-on-year.
“In the past six months, there has been a huge and unexpected change in the Chinese tire market. In the first half of 2016, the industry’s sales revenue fell sharply, but from September to September, it turned negative, eventually achieving a year-on-year increase of 4.43%, which led to the development of natural rubber. There has been a sharp increase of 600,000 tons.†Shen Jinrong, Chairman of Zhongce Rubber Group Co., Ltd. pointed out in the report “Tire Market and Rubber†that the sudden increase in the demand for natural rubber in China and the treatment of “over-limit overload†of heavy trucks. The number of matching tires has increased exponentially, and the replacement market “buy up and not buy†has led to sales growth, an increase in exports of all-steel tires, a higher price of synthetic rubber, an increase in the use of natural rubber, and an increase in demand for bicycle tires due to the mysterious expansion of shared bicycles. Factors are inextricably linked.
Due to "time mismatch," natural rubber prices will fluctuate. As for the “phased growth†of this demand, when it comes back to normal, Shen Jinrong believes that the majority of natural rubber production in March and April will be the cut-off period (this year may be slightly delayed), and the supply will be substantially reduced, while the demand will remain relatively high. It also consumes a lot of inventory, so after "phased fluctuations", by May, there will be prices that all parties in the industry chain are willing to accept. In the new balance, the proportion of their respective dosages will gradually be fixed, and tire manufacturers, rubber traders, and rubber farmers will enter into a healthy operation and become relatively stable.
In summary, according to the analysis of the macroeconomic development situation, as well as comprehensive factors such as industry production, price trends, and structural adjustment changes, the challenges faced by the entire rubber industry this year are still not small, but they will show difficulties in stabilizing and stabilizing.
Calm: Tire companies have a basis for price increases
Car tires are the largest consumer of natural rubber. China's tire consumption accounts for one-third of global tire consumption, and China's tire production exceeds half of the global tire production. Therefore, China is the world's largest consumer of natural rubber.
Tire prices rise
In the trend of stable natural rubber prices, coupled with the growth in consumer demand for passenger vehicles, infrastructure projects such as PPP have been stimulated, demand for heavy trucks, etc. is also picking up, and terminal inventory has been eliminated. This year, the Chinese tire market has ushered in. The price surge. On March 14, Aeolus Tyre Co., Ltd. announced that since March 15th, the ex-factory price of all series of beveled engineering tires has been increased by 8% based on the current price. On the same day, Wanli Tire Co., Ltd. issued a price increase notice. The price of all its branded steel-tire products is up 8% on March 20th. On March 15th, Zhongce Rubber Group announced the price increase again. From March 16 onwards, the price of the product will be adjusted based on the price on March 1.
With regard to this surge in prices, almost all domestic tire companies have been trapped into the ranks of rising prices, and price increases have become a common phenomenon in the industry.
The China Rubber Association’s forecast for the development of the tire industry in 2017 is: China's total tire production is 635 million, an increase of 4.1%, including 591 million radial tires, an increase of 4.6% (125 million total steel tires, an increase of 3.3%; semi-steel tires 466 million, an increase of 5%); 404 million bias tires, a decrease of 2.2%; radial rate of 93%.
In summary, with the development of tire prices with the upstream and downstream industries, as well as the inefficiency of production capacity, overall capacity stability, and end demand trends, there is a foundation for price increases.
Conclusion: Patience and confidence are more valuable than gold
At present, there is still a spread between the price increase of tires and the increase in raw materials. The profit pressure of tire factories has not diminished. Although the implementation of price increase policies has been gradually improved, the end market is following up slowly and the pressure of agents' funds has gradually suppressed the enthusiasm of the stock market. The speed of circulation of goods has slowed down.
As for the market outlook, due to the impact of the macroeconomic environment, the supply and demand relationship in the natural rubber market is still showing a moderately negative trend, and consumer demand is slowly and steadily increasing due to the economic recovery. Therefore, the tire market is also characterized by a long-short and intertwined situation. Under the new normal, where structural contradictions still exist, difficult challenges and opportunities coexist. We are more patient in surmounting difficulties and confident in meeting the future.
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