Understanding the Current RU Price per Ton
As of January 3rd, the RU and NR rubber prices stood at 16840 and 14190 yuan per ton, respectively, experiencing a decline of 860 yuan (4.86%) and 590 yuan (3.99%) from their previous levels. This downward trend can be attributed to the seasonal dynamics of the rubber market, particularly during the pre-Chinese New Year period when supply is abundant and demand is relatively low.
Seasonal Supply and Demand Dynamics
During the Chinese New Year, which typically falls between late January and early February, the rubber market experiences a seasonal shift. The supply side is bolstered by the fact that the main rubber-producing regions in Southeast Asia, such as Thailand, Indonesia, Vietnam, and Malaysia, are in their peak production period from November to the following March. This period accounts for a significant portion of the annual export volume, making it a crucial indicator of the market’s supply conditions.
On the demand side, the situation is somewhat different. The Chinese New Year is traditionally a time when tire manufacturing plants reduce their operations, leading to a decrease in demand for raw rubber. This, coupled with the increase in tire inventory, contributes to the seasonal weakness in the market.
Supply Factors
One of the key factors influencing the supply side is the weather conditions in the rubber-producing regions. As of the latest data, most areas in Southeast Asia have experienced normal rainfall, which is favorable for rubber production. This, combined with the fact that the main production period is approaching, suggests that the supply of rubber is likely to remain robust in the near term.
Looking at the export data, the cumulative export volume of natural rubber and synthetic rubber from the main producing countries (Thailand, Indonesia, Vietnam, Africa, and Malaysia) from January to November 2024 was 763.46 thousand tons, a decrease of 4.99% year-on-year. This indicates that the market is currently facing a supply challenge, although the situation may improve as we move into the peak production period.
Demand Factors
On the demand side, the situation is somewhat different. The Chinese New Year is traditionally a time when tire manufacturing plants reduce their operations, leading to a decrease in demand for raw rubber. This, coupled with the increase in tire inventory, contributes to the seasonal weakness in the market.
According to the latest data, as of December 27th, the weekly capacity utilization rate of semi-steel and all-steel tire production in China remained unchanged. However, the inventory days increased by 1.9% and 2.6% for semi-steel and all-steel tires, respectively. This suggests that the demand for rubber is likely to remain weak in the short term.
Inventory and Price Movement
One of the key factors affecting the price of rubber is the inventory level. As of December, the dry rubber inventory has been on the rise for three consecutive weeks, with an accumulation rate of 2.1% to 3.4%. This increase in inventory has put downward pressure on the price of rubber, as it indicates a surplus of supply in the market.
Table 1: Dry Rubber Inventory and Price Movement (Dec 2023 – Jan 2024)
| Date | Dry Rubber Inventory (thousand tons) | RU Price per Ton (yuan) |
|---|---|---|
| Dec 17 | 100 | 17000 |
| Dec 24 | 102 | 16900 |
| Dec 31 | 104 | 16840 |
| Jan 7 | 106 | 16780 |
As can be seen from the table, the increase in inventory has been accompanied by a decline in the price of rubber. This suggests that the current downward trend in the market is primarily driven by the supply-side factors, particularly the increase in inventory.
Conclusion
In conclusion, the current RU price per ton is influenced by a combination of seasonal supply and demand dynamics. While the supply side is expected to remain robust due to favorable weather conditions
