High Price Transmission in the Rubber Industry Chain (November 2020)
[Introduction] This month, the price in the rubber industry chain remained at a high level. The price of upstream feedstock was still strong, and the downstream tire market was forced to form a second price increase due to the high cost pressure. It was difficult to quell the high price transmission in the industry chain in the short term.
In November, the prices of rubber’s main feedstock remained at highs. At the same time, the prices of tires increased supported by the high feedstock cost st downstream tire producers.
Review
In terms of natural rubber, in November, the prices of NR futures at the SHFE were range-bound after the sharp decline. At the beginning of November, the NR prices decreased because the price was adjusted after the sharp price increase in October, returning from the capital market to the fundamentals. RU2101 at the SHFE fell as low as 13,780, down 17.16% from 16,635 at the end of October. In the middle of November, with the recovery of downstream demand and the improvement of the external environment, the market prices stopped falling and entered the period of adjustment and repair, and the spot market also adjusted accordingly. As of November 25, the monthly average price of RU2101 was closed at RMB 14,548/mt, up 0.31% M-O-M.
In terms of synthetic rubber, in November, the growth of China’s SBR and PBR market prices slowed down, and the supply prices of SBR and PBR increased by RMB 200/mt by sales companies this month. Besides, the price trend of NR futures at the SHFE and butadiene was relatively strong, but its impact on SBR and PBR market atmosphere was limited. The main reason was that tire producers and other end producers mainly consumed their early inventory, with weak buying enthusiasm. The circulation of spot goods was sluggish, which barely supported SBR and PBR markets from the demand side. The SBR and PBR holders were cautious. The actual dealing prices were negotiable, and SBR and PBR markets were stagnant. Given the current market situation, SCI estimates that China’s SBR and PRB markets will be range-bound in December, and the prices are expected to increase.
