The most popular multiple factors urge Shanghai Ji

2022-07-26
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Multiple factors have prompted Shanghai rubber to maintain its anti seasonal strength. 1. Overview of the market. June to July is the peak season for rubber cutting in the traditional sense. A large number of new rubber will generally depress the price of rubber. In the past two months, the price of Shanghai Jiao futures also tended to fall more or rise less. However, under the combined effect of tight spot supply, high crude oil price, serial acquisition of Shulman and citadel plastics Inc., and abundant speculative funds, the future and current prices of natural rubber hit new highs in June and July this year, showing a very strong trend. At the same time, the fierce capital game in the market has led to the "ice and fire" pattern in which the futures prices of the Shanghai Jiao 809 contract and the 811 contract are very different

II. Market background and structure

1 At the beginning of this year, Hainan reclamation area in China suffered a rare cold disaster in the past 50 years, while a large-scale powdery mildew of rubber trees broke out in Yunnan reclamation area after the middle of January, resulting in the delay of rubber cutting and the reduction of production in these two reclamation areas. It is conservatively estimated that the rubber output of Hainan Yunnan Agricultural Reclamation will be reduced by million tons, while that of Guangdong Agricultural Reclamation will be reduced by tons

at the same time, after June, due to the influence of "La Nina" climate phenomenon, Southeast Asia has frequent rainstorms. At the same time, most of southern China has also been hit by heavy rainfall. Frequent rainfall has greatly affected the process of tapping, transportation and sales of natural rubber at home and abroad, and intensified the contradiction of supply

in addition, the rubber farmers in the reclamation area saw the rise in the rubber market and had a strong reluctance to sell. Due to the surplus of funds in the hands of Southeast Asian rubber farmers, they are not in a hurry to sell raw materials for cash; However, 95% of the rubber plantations in Thailand are in the hands of small farmers, so even a little storage capacity of thousands of households can be accumulated, which has a great impact on the supply

it is understood that the purchasing volume of raw materials from June to July by major manufacturers in Thailand is less than 50% of the normal level

figure 1 Historical comparison chart of Thai rubber export volume in June

historical comparison chart of Thai rubber export volume in June. (source: China Rubber information)

2 The tire industry continued to develop rapidly, and the demand for natural rubber grew strongly.

it was learned from the China automobile industry association that in the first half of this year, the national automobile production and sales exceeded 5million, with a year-on-year growth of more than 15%. In addition, according to the data released by the National Bureau of statistics, China's tire production in June increased by 13% over the same period last year, reaching 5. This kind of phenomenon is not completely the same as the large deformation (high elastic deformation or plastic deformation) above the glass transition temperature, but also different from the viscosity activity of 0.67 million pieces at high temperature. In June this year, China produced 280.66 million tires, an increase of 13% over the same period last year when adopting a wide range of inherited circuits. As the consumption of natural rubber by the domestic tire industry accounts for more than 65% of the total consumption of natural rubber in China, China's demand for natural rubber is still very strong due to the sustained development of the tire industry from June to July

figure 2 China's natural rubber import volume from 2005 to 2008. (source: China Rubber information)

3 Domestic natural rubber inventory remained low from June to July. Due to the tight supply of raw materials in natural rubber producing areas, China's circulation inventory, especially the inventory of downstream factories, continued, and China's plastic gap was very large every year, which was in a very low state. At the same time, the high price also led to downstream and traders' reluctance to build up a large number of inventory, and the overall inventory of natural rubber continued to remain at a low level

the low level of natural rubber inventory makes buyers in the spot market in a passive state, especially the domestic small and medium-sized rubber consuming enterprises are forced to purchase raw materials at a high level due to insufficient inventory. The bulls in the natural rubber futures market see this situation, and take the low level of inventory as one of the main reasons for their long rubber prices

Figure 3: change of natural rubber inventory in Shanghai (as of July 25, 2008)

change trend of natural rubber inventory in Shanghai. (source: Wenhua Finance)

4 In June and July, affected by geopolitical tension, the expected interest rate hike by the European Central Bank, the production reduction in Libya, the interruption of crude oil supply in Nigeria, the sharp fall in the US dollar caused by the stabilization of interest rates by the Federal Reserve and other factors, as well as the full promotion of speculative forces, the overall international crude oil price showed a sharp oscillation and jump upward trend. In the first ten days of July, the oil price rose rapidly from $120/barrel to above $147/barrel, setting a record high price

Figure 4: US crude oil index price trend chart

US crude oil index price trend chart. (source: Pengbo financial investment analysis system)

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