Loss of tire market fell after natural rubber fell in March

Since June 2015, Hujiao has fallen for three months due to the arrival of the seasonal seasonal supply season, coupled with high downstream inventory, export restrictions and weak terminal demand. With the gradual release of the industrial chain and systemic risks, the Jiaojia price was supported in September. The main contract 1601 oscillated between 11,000 and 12,000 yuan/ton.

Loss of tire market fell after natural rubber fell in March

Downstream market further shrinks

According to the latest data, the final value of China's fiscal new manufacturing PMI for September was 47.2, the lowest since March 2009, and it has been below the 50-year-old line for the seventh consecutive month. According to the sales data of terminal vehicles, the number of passenger vehicles sold was 1.42 million in August, a year-on-year decrease of 3.4%; the cumulative sales from January to August totaled 12.78 million, an increase of 2.6% year-on-year. Since the second quarter of this year, sales in the single month have continued to be weaker than the same period of last year, dragging down the cumulative growth of passenger vehicles from a year earlier.

In addition, commercial vehicles sold 246,000 vehicles in August, a year-on-year decrease of 0.6%, and a year-on-year decrease of 12.4%. Among them, the monthly direct sales of heavy-duty trucks for natural rubber demand in the sub-items decreased by 28.9% year-on-year, and the cumulative year-on-year decrease was 30.3%, which is an important reason for the overall sales of commercial vehicles to be lowered.

In terms of tires , the United States began to impose high “double reverse” tariffs on Chinese exports of tires. In August, tire production and exports declined significantly. In August, the output of rubber tire casings was 81.4 million, a year-on-year decrease of 13.8%, a cumulative year-on-year decrease of 15.5%, and exports of 37.61 million, a year-on-year decrease of 13.5%, a year-on-year decrease of 5.8%. In order to prevent excessive inventory of finished products, enterprises actively reduced the operating rate. As of September 25th, the operating rate of all-steel tires for tyre enterprises in Shandong was 62.3%, down by 12.7% year-on-year; the operating rate of semi-steel tyres for domestic tire enterprises was 62.1%. The year-on-year decrease was 26.1%.

The year-on-year decrease in operating rate and output of tire enterprises and exports maintained relatively consistent, indicating that tire enterprises have a better understanding of terminal demand, matching production and demand, and the situation of excess finished goods remains relatively stable. It is expected that the overall export of tires will continue to be affected by the “double reverse” in the United States. On the one hand, enterprises are hindering the policy of bypassing overseas factories and on the other hand, they will open up new export destinations to ease the negative impact of the US market.

Import stabilization stabilizes raw material inventory recovery

According to the data released by the Natural Rubber Producing Countries Association (ANRPC), in August, the main producing country produced 983,000 tons of natural rubber, a year-on-year increase of 6.7%, and a cumulative decrease of 1.1%. Although Vietnam's monthly production fell 13.6% year-on-year, Thailand, Indonesia, and Malaysia produced 15.3%, 4.2%, and 18.8% year-on-year growth respectively. In the beginning of the year, due to the impact of weather, the opening of production was relatively late, and the cumulative output decreased by 4.8% year-on-year. However, with the arrival of the production season, the monthly output rose by 2.0% from the same period of last year.

In August, imports of natural rubber (including rubber compound) totaled 291,000 tons, a year-on-year increase of 6.7%, and a cumulative decrease of 5.8%. In terms of sub-items, tobacco tablets performed well, with imports of 24,000 tons, an increase of 29.5% from the previous period, and a year-on-year increase of 40.2%; standard rubber imports were 208,000 tons, a year-on-year decrease of 3.1%, and a year-on-year increase of 81.8%; affected by the implementation of the national standard. The import of plastics dropped further. In August, it imported only 25,000 tons, a decrease of 12.6% from the previous month and a 77.8% year-on-year decrease.

However, the increase in imports in August did not come from the increase in downstream demand. Since September, rubber stocks in Qingdao Free Trade Zone have continued to grow. As of the end of September, total inventory reached 181,600 tons. It is understood that monthly changes in synthetic rubber inventory is not large, and therefore after deducting synthetic rubber natural rubber (including rubber) inventory increased by 40.1%, a year-on-year increase of 17.4%. At present, there are less than 10,000 tons of rubber stocks in the bonded area, so the increase in natural rubber stocks is an important force to push up the total stocks, and the structure and trends of the stock changes in the bonded area are consistent with the import situation.

In addition, weak demand in the spot market has prompted companies to increase hedging efforts. Shanghai Futures Exchange stocks and registered warehouse receipts reached a record high: As of the end of September, stocks were 206,000 tons, and warehouse receipts were 155,000 tons, up 24.0% and 29.3% respectively year-on-year, which put pressure on the prices of the far-month futures contracts.

Looking at the upstream and downstream of the integrated industrial chain, currently, the natural rubber market has not shown any positive signs. With time for space, may have to wait until the domestic entry into the season, Hujiao only possible rebound opportunity.

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