Large increase in output is not conducive to rubber prices

Shanghai natural rubber futures January contract rose 0.83% in early trading on the 15th. European and American stock markets continued to rise, and the volatility of the capital market decreased, helping to stabilize the price of the rubber market. Thanks to favorable weather conditions, Malaysian production in one of the three major rubber-producing countries has risen sharply, and investors are concerned that the rapid increase in supply will hinder price increases.

On the 12th, the September crude oil contract on the New York Mercantile Exchange fell 0.34 US dollars or 0.4% to US$85.38 per barrel. Affected by high unemployment, low wages, and debt negotiations, consumer confidence in the US fell to its lowest level in more than 30 years in August, far below market expectations; US inventories in July rose only slightly, by May 2010. It has been the lowest since showing that US consumers and businesses are not optimistic about the economic outlook. However, the U.S. Department of Commerce reported that, driven by the increase in car sales, the U.S. retail sales rose by 0.5% in July, indicating that the U.S. economy is improving, easing market concerns and limiting the drop in crude oil. The drop in crude oil will reduce the cost of synthetic rubber, which is detrimental to natural rubber prices.

Weather conditions, natural rubber producing areas in Thailand, cloudy northern and central Thailand, southern cloudy; Malaysian areas, southern Malaysian rain, rain on Kalimantan islands north; Indonesian areas, Sumatra raining north of the equator, Sumatra The south of the equator is cloudy, with rain on the southern part of Kalimantan; in China, Hainan is cloudy, and Yunnan is showery. The weather has little effect on tapping production and transportation.

In the Asian spot market, prices have mixed up and down in the previous trading day. Thailand is on a public holiday. September/October shipment of Thailand's No. 3 smoke tablet rubber RSS3 was not quoted. Shipment of Malaysian tire grade standard rubber SMR20 for October/November was settled at US$4,680 per ton FOB basis. On the 15th, Malaysia Standard SMR20 September official FOB quotation remained stable in the morning.

In other respects, the Malaysian Bureau of Statistics announced that in June, the country’s natural rubber production increased by 19% year-on-year to 84,000 tons, and its export volume decreased by 4% to 69,000 tons. As of the end of June, Malaysian rubber stocks totaled 123,000 tons, a 5% increase over the same period last year. The country imported 46,000 tons of rubber in June, a decrease of 8%. The data shows that the increase in output far exceeds the estimate at the beginning of the year. Malaysia's supply level will soon rise, and its own demand will decline, leading to a significant increase in inventories, which will be detrimental to the rubber market.

In general, the commodity market is stabilizing. The risk has not yet gone. The EU has not made much progress in the debt crisis. The ban on short selling has slightly stabilized investor confidence. The US consumer confidence in August fell to the lowest level in more than 30 years, and the economic outlook is still not optimistic. At the same time, monetary policy will be more relaxed, offsetting some of the pressure. The United States made a zero interest rate commitment, the European Central Bank also announced the purchase of sovereign debt in crisis, and Japan continues to work hard to stimulate the economy. It is expected that the Chinese government will gradually loosen some policies to prevent the economic growth from falling too fast. The external situation did not put too much pressure on the rubber market. U.S. auto consumption continued to rebound, and it also stabilized investor confidence in the growth of demand for rubber. Due to the influence of weather, some chemical companies reduced their production and supported synthetic rubber. However, the weather in Southeast Asia is favorable for tapping production, and Malaysia's statistics show a significant increase in production by 19%, and inventory levels have risen significantly. On the other hand, under the pressure of China's economic slowdown, Chinese traders have hesitated to purchase, despite falling inventory levels. The demand has not been increased, and the need for stockpiling and adequate stocking has been greatly reduced. The rubber market is stabilizing and the upside is limited.