High STR Profit and Low Inventory in Bonded Zone
SCI learned that China’s natural rubber price rebounded after having dropped to a record low due to the outbreak of pandemic, while the profits from standard rubber production had been relatively high in Thailand. Under normal conditions, high profits will drive processing plants to produce more so as to strongly support the industry. However, China’s inventory of natural rubber priced in US dollar stayed low in 2020. Now, this paper will try to explain this contradiction from multiple perspectives.
As shown by SCI’s statistics about Thailand’s profits from standard rubber processing from 2014 to 2021, the profit was relatively high in 2020 compared with past years. The average annual profit was $27/mt in 2020, up $49/mt from a year ago, which indicated a big rise in profit and stimulated processing plants to quicken their production.
It’s well known that the rising of natural rubber inventory in Qingdao is closely connected with huge rubber imports. As shown by the above chart, the inventories outside and inside Qingdao Bonded Zone differed greatly against the background of a continuous rise in the total inventory. The inventory inside the bonded zone was low, ranging from 100kt to 200kt, while the inventory for general trade had already climbed up to above 700kt. The low-level inventory inside the bonded zone was contrary to the high profits of standard rubber processing in Thailand. In SCI’s opinions, there are several reasons for this.
