On February 24th, the domestic natural rubber market welcomed its first trading day after the Spring Festival. The main Shanghai rubber contract opened high and rose, with the 2605 contract closing at 17030 yuan/ton, up 4.38% from the closing price of 16315 yuan/ton on the last trading day before the holiday.
The spot market has rebounded synchronously, with prices for Thai cigarettes and standard rubber increasing. Domestic spot prices for all latex follow the upward trend of futures, and traders are actively quoting. According to the monitoring of Business Society, as of February 24th, the spot rubber market in China’s natural rubber market was around 16833 yuan/ton, an increase of 3.38% from the pre holiday price.
External market strengthens, supply side contracts, igniting post holiday uptrend
On the one hand, during the Spring Festival holiday, Tokyo rubber futures have risen by about 3%, and the prices of Thai raw materials such as glue and cup glue have also increased. As of February 24th, the price of Thai glue was 67.00 baht/kg, an increase of 9.84% from the pre holiday price of 61.00 baht/kg. On the other hand, major producing countries such as Thailand and Indonesia are gradually entering a low yield season, coupled with local rainfall affecting rubber production, resulting in a lower year-on-year output of raw materials. The domestic production areas in Yunnan and Hainan are in a winter cutting period, with a shortage of domestic rubber supply and an overall tight supply pattern in the market.
In addition, the domestic macro atmosphere is relatively warm, and there is a strong demand for repairing the valuation of natural rubber. The resonance of emotions between the natural rubber spot market and the futures market has driven up the price of natural rubber significantly.
Future outlook:
The natural rubber analyst from Shengyi Society believes that the current seasonal tightening of supply and strong support from external markets will maintain high natural rubber prices in the short term. In the later stage, we still need to pay attention to the speed of downstream tire companies’ resumption of production and the intensity of Tianjiao’s inventory destocking.
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