Demand expectations are weak, and Shanghai rubber is weak and difficult to change

Spot price: Shanghai market 15 years Yunxiang state-owned whole milk quotation of 17400 yuan / ton (-100).

Qingdao area Thai RMB mixed rubber 17500 yuan / ton (-200), Vietnam 3L mixed rubber quotation 17600 yuan / ton (-100), Thailand 3# tobacco flakes 18700 yuan / ton (-0).

Free Trade Zone, RSS3 Honmanli Tobacco Tablets 2400-2450 USD/ton (+20); Thailand standard spot 2100-2120 US dollars / ton (-30).

Cargo 2100 (-30).

Externally, RSS3# is trading at $2460-2500/ton (-50), and STR20# is trading at $2150-2200/ton (-50).

The purchase price of raw materials in Thailand was mixed, with raw film 74.
50, down 1.
30; cigarette film, down 1.
52; glue 75.
00, up 3.
00; cup glue 64.
00, down 1.
00 (baht/kg).

Inventory: As of mid-February 2017, rubber stocks in Qingdao Free Trade Zone soared to 156,600 tons, an increase of 28.
57%.

Among them, natural rubber was 116,200 tons, an increase of 27.
55%; synthetic rubber 36,000 tons, an increase of 37.
4%; Composite rubber 04,400 tons, down 2.
22%.

Vehicle production and inventory index: China's vehicle sales in January were 2.
52 million units, up 0.
2% y/y (up 9.
5%
in the previous month).
Domestic sales of passenger cars in the narrow sense in January were 2.
075 million units, down 9.
3% y/y and 23.
5%
m/m.
The decline of the purchase tax preferential policy and the early Spring Festival led to the "cold start"
of the car market in January this year.
In January 2017, the domestic heavy-duty truck market sold approximately 82,000 vehicles of all types, up 9% month-on-month and up 122%
from 36,800 units in the same period last year.
In January 2017, the auto dealer inventory warning index was 61.
5%, up 18.
6 percentage points from the previous month, and soared above
the warning line again.
This huge fluctuation has not even occurred in the past two years
.

Tianjiao import and export: China imported 345,000 tons of natural rubber in December, an increase of 15.
4% year-on-year and 19.
6%
month-on-month.
So far, in 2016, China imported a total of 2.
501 million tons of natural rubber, down 8.
6%
year-on-year.

The main reasons for the recent weakening of Shanghai rubber are: 1.
The tightening
of domestic monetary policy.
February and January auto sales increased by 0.
2% y/y, and auto sales began to weaken
.
3.
Real estate sales, new housing construction area, real estate prices and other indicators show a clear cyclical downward adjustment trend
.
In January, the online signing area of commercial housing in 30 large and medium-sized cities fell by 36% year-on-year, and began to enter negative growth in November 2016, indicating that new construction starts will be suppressed
after June.
4.
There is limited
room for significant expansion of infrastructure investment.
Although the strong desire of local governments to focus on infrastructure construction can be seen from local government work reports, "where will the money come from" has always been an important doubt
.
Combined with the general lowering of fiscal revenue expectations for 2017, the further reduction of transferable carry-over funds, and the central government's reiteration this week to strictly regulate local government borrowing, we expect that the strength of infrastructure development in 2017 may not reach the level
expected by the previous market.