Upstream and Downstream Rubber Markets Remained Weak in Mar

SCI99

2020-03-27

Upstream and Downstream Rubber Markets Remained Weak in Mar

[Introduction] In March, the overall domestic environment gradually improved, but the external unfavorable news occurred frequently. Dragged down that, the overall rubber market remained in a downtrend. The rubber industry was in a bearish atmosphere. Upstream and downstream markets remained weak.

In March, the prices of main rubber products saw constant decreases. Although the operating rate at downstream tire enterprises recovered, sales at the domestic market were sluggish and the export market was blocked. Downstream users mainly adopted a wait-and-see stance.

Specific Product Market Review and Forecast:

Natural rubber: In March, the NR futures price at the SHFE continued to drop and even decreased to RMB 9,300/mt, hitting an 11-year low. The spot market also declined constantly. For the time being, mainstream prices of SCRWF and mixed rubber decreased to RMB 9,000-9,500/mt in 2018. The natural rubber slump was based on the following reasons. Firstly, the social supply was sufficient in China, and the demand followed at a slow pace. The natural rubber market was in strong supply and weak demand pattern. Secondly, international crude oil prices dropped sharply, dragging down the natural rubber market. Thirdly, affected by external public health event, the demand for natural rubber is expected to decline in the future, weighing on the market as well.

SBR: In March, China’s SBR market price went lower. The demand for SBR didn’t improve after end tire tires resumed production. Thus, the SBR resources were accumulated gradually. The sales pressure was high. Amid high supply and low demand, China’s SBR market saw constant decreases. Within this month, China’s SBR price dropped by RMB 1,300/mt. After the price slump, the trading volume was still low and the market remained tepid. Offers from traders were close to the ex-works price. The actual trading volume was still week. SCI reckons that China’s SBR market will continue to go down in April.

PBR: In March, China’s PBR market price crashed. Within this month, the feedstock butadiene price was at a low level. The marginal benefit of the PBR industry was relatively considerable. In this case, the overall operating rate of the PBR industry was high, and the PBR supply was sufficient. However, downstream enterprises recovered at a slow pace, and the demand for feedstock was weak. The ample PBR supply dragged down the market to some extent. Meanwhile, affected by the public health event, the crude oil prices slumped, triggering off the market panic. Traders lacked confidence in the market and promoted sales by cutting prices. Within this month, the PBR sales company cut the BR9000 ex-works price by RMB 1,500/mt. However, the price decline policy didn’t stimulate the actual buying sentiment. The actual dealing was in a stalemate. SCI predicts that China’s PBR market will trend at lows in April.

Tire: Although the operation of the all-steel tire market in March was moderate, its sustainability was not strong. Buyers purchased the tire at a slow pace. According to sources, although the agents and scale distributors purchased the tire resources in the month, the sales volume was not good. More inventory replenishment only increased capital pressure. After centralized replenishment at the beginning of the month, the purchasing volume returned to a national level. Due to the limited trading volume, the tire price was also less regulated. Most of the agents conducted early price policies. Only a few agents conducted price promotion policies. SCI reckons that the sales atmosphere in all-steel tire market is expected to be favorable in April, which will be bolstered the end demand. Thus, the all-steel tire market will see the second round of replenishment. Besides, the competition will be fiercer in China’s all-steel tire market. Thus, there is a possibility that the agents will conduct price promotion policies.

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