China NR Social Inventory Remains High
Since April, China’s natural rubber price has been rebounding as the domestic demand recovers gradually. Even so, natural rubber price is still lower than that before the Spring Festival. China’s high inventory of natural rubber has become one of the key factors depressing the natural rubber price from rebounding further. Here is the analysis of natural rubber industry’s inventory.
This year’s futures warehouse receipts inventory has been low in comparison to that over the past years. In 2020, the inventory has been 200-250kt, down almost 50% Y-O-Y. There are several reasons for this. First, at the beginning of rubber tapping period, drought, disease and the outbreak of Covid-19 together made the natural rubber price low. The resumption of rubber tapping work was delayed by 1-2 months. The field latex output only began to increase in June. All this seriously impacted the new rubber output. Second, downstream demand for latex increased due mostly to the Covid-19. Those latex enterprises made better profits, and consequently they could give higher offers for field latex than the dry rubber enterprises. The latter bought less field latex, and SCRWF output could hardly rise effectively. The warehouse receipts inventory remained low. The supply of spot rubber was tight. As of September 11, total natural rubber inventory was 245.9kt, and warehouse receipts inventory was 215.2kt.
Inventory at Qingdao Bonded area and inventory for general trade acted differently
