Feb Main Rubber Feedstock Price Increased

SCI99

2019-03-01

Feb Main Rubber Feedstock Price Increased

In February, prices of main rubber feedstock remained in an uptrend. Especially, natural rubber prices saw constant increases. Driven by that, prices of other rubber feedstock also climbed. At the same time, due to favorable policies, all-steel tire market performed well, and tire enterprises replenished their inventory intensively. However, end users underperformed and the demand was slightly slack.

Natural rubber: NR futures prices at the SHFE went higher constantly after the Spring Festival holiday. Prices of dominant contract 1905 increased by RMB 1,600/mt, based on the following aspects. The seasonal supply was expected to be low and thehype atmosphere was thick. Besides, bolstered by the policy introduced by China to promote vehicle consumption in rural areas and China-U.S. trade negotiation, offers for spot NR in China increased. However, the demand from downstream industries resumed at a slow pace after the holiday, and the whole trading atmosphere was insipid. In March, for domestic producing areas, rubber tapping will begin in March. Although the demand for NR will warm up gradually, NR prices will first climb and then decline restricted by the funds in March.

SBR: In February, China’s ESBR prices were range-bound. After the holiday, the SBR resources were accumulated and most ofend users were still in the holiday. Thus, the demand for SBR was limited. Besides, with butadiene prices dropping constantly, offers for SBR went lower accordingly. However, in mid-February, NR futures prices at the SHFE moved up in succession, driving up market participants’ sentiment. Thus, offers for SBR rallied tentatively, while China’s ESBR prices were not high under pressure. China’s ESBR price was not high and traders were reluctant to sell at lows. The whole market was in a stalemate.

PBR: In February, China’s HCBR market saw small-ranged movements. After the Spring Festival holiday, with butadiene prices going down and soft downstream demand, players lackedconfidence to the market and offers moved down constantly. In mid-February, PBR offers were even lower than the supply price. In late February, boosted by favorable macro-economy and funds, the increase in NR futures prices at the SHFE and butadiene price, PBR prices went higher accordingly. Participants were reluctant to sell at lows and PBR prices edged up. However, after the price increase, the demand from downstream industries was average. The actual dealings were sparse in the market.

Tire: In February, all-steel tire market showed different performance affected by the Spring Festival holiday. During the holiday, China’s all-steel tire market was basically in a stalemate. However, after the holiday, tire traders in different regions held the order-placing meetings to boost the tire sales. However, the favorable trading didn’t last for a long time. Besides, in late February, some tire enterprises pushed up the price increase policies boosted by the feedstock price increase and new policy regulation. SCI holds that feedstock prices increase after the holiday. Driven by that, tire prices may increase. Yet, the demand is still slack for the time being. Thus, in March, all-steel tire price will probably move down.

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