Unpredictable Drifts in Natural Rubber Prices
In a recent development affecting the tyre industry, the operational load of tyre factories has faced a significant decline, clashing with fluctuations in the price of natural rubber. According to the Xinhua Index, the natural rubber price index, checked from January 2 to 8, shows an overall unstable trend, shedding light on the challenges experienced by the industry players.
Operational Challenges and Supply-Demand Shifts
Examining the specifics, on January 8, 2024, the price index of standard rubber (TSR20) stated 1038.33 points, marking a 0.84% decline from the previous release date. The price index of mixed rubber (20#) stated 1030.02 points, observing a 1.90% fall. A pause in cutting operations within domestic production areas, intensified by the suspension of updates for thick latex and natural rubber latex indices, is responsible for the decline.
In terms of pricing, the average prices of standard rubber, natural rubber, and mixed rubber latex have shown an unstable trend. Standard rubber (TSR20) changes within the range of 1539.51-1595.00 US dollars/ton, while mixed rubber (20#) maintains an average price in the range of 1550.00-1600.00 US dollars/ton.
Operational Slowdowns and Environmental Factors
The industry is struggling with challenges on both the demand and supply fronts. Northern Thailand and Vietnam have entered the leaf-falling period, contributing to decreased production in Southeast Asia’s main natural rubber producing areas. Concurrently, domestic production areas are undergoing a winter harvesting period, resulting in a gradual decrease in the supply of upstream raw materials.
On the demand side, the New Year’s Day holiday has substantially reduced the operating rate of tyre companies. Longzhong Information data reveals a substantial decrease in the operating rates of China’s all-steel and semi-steel tyre sample companies. Senior analyst Li Zhi attributes the slowdown to December’s decreased shipments, increasing cost inventories, and the effect of environmental factors. Some companies in Shandong’s main production areas have scheduled maintenance, influencing the overall capacity utilization rate of sample enterprises.
Industry Predicts Short-Term Price Shifts
Despite the challenges, a thorough analysis shows that, on the supply side, major production areas worldwide are slowly suspending cutting operations, causing a decrease in the supply of upstream raw materials. On the demand side, as tyre factories continue operations post-holiday, an overall rebound in demand is predicted. Experts anticipate a potential upward trend in rubber prices in the short term.
