Shanghai rubber prices continue to be weak and inventory pressure is high

From the data, China imported a total of 709,100 tons of natural rubber in December last year, an increase of 29.
40% month-on-month and 20.
42% year-on-year, a record high
.

In addition, since entering 2018, the overall demand operating rate of tire factories has not changed greatly, and the operating rate of all-steel tires and semi-steel tires of tire factories has increased slightly for 3 consecutive weeks from the New Year's Day holiday, and the overall data is higher than the same period last year and at a recent high
.
Therefore, despite the recent record low in futures prices, the real fundamentals of rubber demand have not weakened
.

The spot inventory in Kunming, Yunnan Province, rushed to a record high of more than 200,000 tons
.
Although the downstream maintains a certain amount of rigid demand, the huge inventory still suppresses
the spot price.
As of January 26, the inventory subtotal of the previous period totaled 419,000 tons, and the warehouse receipt was 363,000 tons
.
In this regard, Zhang Fuchao, deputy head of the "Golden Rubber" group of Guoxin Futures, said that the accumulation of warehouse receipts is very fast, which is also one of the
main factors causing the decline in rubber prices.

According to industry insiders, the recent high number of registered warehouse receipts highlights the contradiction
between the current position structure of rubber futures and the spread structure.
The high warehouse receipt inventory and the high position volume on the market have brought great pressure to this market, including the impact of inventory pressure caused by non-standard arbitrage, making the current Shanghai rubber seem to fall into a unique "liquidity trap"
.

It is understood that the "liquidity trap" of rubber mainly stems from the "seesaw effect" formed by capital liquidity and cargo liquidity, that is, the spot inventory accumulated by the arbitrage disk is too high, and at the same time the market's dredging ability is difficult to digest, while the premium of the futures far month continues to be high, so that China imports a large number of rubber, more retained in the warehouse of the arbitrage disk
.
The high inventory will also bring about the tightness of the warehouse capacity, resulting in the continued investment position of funds is affected, and at the same time, many parties are also facing the same pressure of taking over, and the excessive lag of cargo liquidity makes the rubber market fall into the "trap" of high positions and low transactions
.

However, for the domestic market, there is still a time for foreign old rubber to be stocked, so the overall inventory will be at a high level
in the short term.
In this regard, the main reason for this round of decline is the return of the price spread of non-standard arbitrage, of which the price difference of mixed rubber has narrowed by nearly 1,000 yuan / ton since the high at the beginning of the month, and the possibility of continued narrowing still exists
.