Rubber Imports Slipped in Apr, NR Destocking Process Speeded Up

In April, China’s rubber (including natural rubber and synthetic rubber) import volume was 428kt, down 25.95% M-O-M and down 26.20% Y-O-Y. The import volume kept dropping from last year for the third month. In the first four months in 2018, the accumulative import volume was 2,081kt, down 11.5% from last year. SCI analysts predict that China’s April NR import volume is to be around 350kt.

The import volume decline mainly affected the inflow volume at the Qingdao Bonded Area. According to SCI’s research on the warehouses in and out of the bonded area, the overall inflow volume in April slipped from March, but the ex-warehouse volume increased relatively. Thus, the inventories at the Qingdao Bonded Area showed a downtrend. The previous tight stock capacity also eased somewhat.

With the decline in rubber import volume, the rubber inventory decrease at the Qingdao Bonded Area also speeded up, which showed the contradiction between the supply and the demand in the NR market. In early May, the total rubber inventory at the Qingdao Bonded Area was about 183.4kt, down 21.5kt or 10.49% from mid-April. The NR inventory was 73.7kt, down 17kt or 18.74% from mid-April. The SR inventory was 106kt, down 4.5kt or 4.07% from mid-April. The inventory of compound rubber was 3.7kt, unchanged from mid-April.

It shows the contraction in the NR market. The NR import volume decrease indicates that the off season in the downstream industries is to come. With the electricity consumption limitation in summer and the environmental protection inspection, the operation at the downstream enterprises will also be affected. The rubber inventory decrease at the Qingdao Bonded Area also shows that the users prefer to purchase spot resources, as prices of the forward contract cargos are relatively higher. Users mainly purchase on a need-to basis at the moment, and they have low interest in stocking up of feedstock. Thus, the inventories at the Qingdao Bonded Area are likely to drop further.