Strong supply and weak demand in fundamentals Rubber inventory pressure increases

The supply side is at a stage peak

At present, the country and abroad are in a new round of rubber tapping season
.
In Southeast Asia, from the end of April to the beginning of May every year, the rubber producing areas in southern Thailand, Malaysia and northern Indonesia will enter the cutting period
.
With the opening of the largest rubber plantation areas, the supply of new rubber will grow rapidly
.
Although Thailand's previous export restriction policy was postponed to May due to the country's presidential election, it is at the peak of new rubber supply, the effect of policy intervention is expected to be reduced, and the supply increase is still large
.

As far as domestic production areas are concerned, Hainan production areas are currently in the stage
of releasing new rubber.
It is understood that the Hainan trading hall has recently sold domestic new rubber, and the mainstream price is mostly stable at 8800 yuan / ton, but the transaction is more difficult, and the overall price reduction is more obvious
.
However, the situation in Xishuangbanna production area in Yunnan is slightly better, the purchase price of raw materials has risen slightly, and the purchase price of glue is 10.
1-10.
2 yuan / kg, which is mainly because the current rainfall in the Jinghong area is less, the amount of rubber produced after cutting is not ideal, the drought factor has not yet been digested, and the glue production has not been concentrated and emerged, and it is expected to improve until mid-May
.
On the whole, the supply pressure of new rubber at home and abroad will increase significantly after May Day, and with the current downstream cautious purchasing willingness, the supply increment is expected to be difficult to digest
in the short term.

It is difficult for terminal demand to improve beyond expectations

Affected by consumption overdraft and high base, China's auto market production and sales have been poor since this year, and the decline of weak demand has not improved
.
According to data released by the China Association of Automobile Manufacturers, although automobile production and sales increased month-on-month in March, they still fell
slightly year-on-year.
In March, China's automobile production and sales reached 2.
558 million units and 2.
52 million units, respectively, down 2.
7% and 5.
2%
from the same period last year.
In the first quarter, vehicle production totaled 6.
336 million units, down 9.
8% y/y, and sales totaled 6.
372 million units, down 9.
8% y/y, and sales totaled 6.
372 million units
.
From the perspective of potential purchasing power, the debt ratio of the residential sector has been rising in recent years, reaching about
50% in 2018.
From the perspective of the speed of increase in leverage ratio, the leverage ratio of Chinese residents has accelerated significantly since 2008, especially in the two years from 2015 to 2017, the debt ratio increased by nearly 10 percentage points
.
In view of the improvement of the leverage ratio of Chinese residents, housing loans squeeze automobile consumption, and the sales potential of the future car market is insufficient, it is expected that the growth rate of new car production and sales will still face the risk
of falling this year.
The expected weakening of the increase in terminal consumption will weaken the growth prospects
of Shanghai rubber demand.

It is difficult for terminal demand to improve beyond expectations, and the supply side is in a phased peak period, which further increases the pressure of rubber social explicit inventory
.
As of the week of April 26, the inventory of Shanghai rubber futures was 430588 tons, a significant increase of 55.
48% over the average of the past five years; The weekly registered warehouse receipt was 415,540 tons, a significant increase of 70.
52%
over the average of the past five years.
At the same time, the current rubber stock in Qingdao Free Trade Zone is maintained at 200,000-250,000 tons, and the inventory outside the zone is maintained at about 450,000 tons, and the total amount is at a historically high level
.

In view of the current concentrated listing of domestic new rubber, and the limited improvement of downstream demand, it is difficult to undertake supply increments, and the social explicit inventory remains high, it is expected that the future market rubber price will show a weak bottom-seeking trend, and the futures price will test the lower 11000-11200 yuan / ton first-line support
.