Chinese Natural Rubber Market under the Financial Crisis

The global financial crisis has brought a serious impact on China's natural rubber market. In the fourth quarter of 2008, the price of natural rubber plunged more than 70% from its historic high and was in a low-price market. Entering 2009, this market is facing many favorable and unfavorable factors at the same time, and it is likely to launch a price tug-of-war.

By 2007, the planting area of natural rubber in China had reached 875,000 hectares, with an annual output of 590,000 tons. The planting area and rubber production ranked fifth among 43 rubber-producing countries in the world. Under the impact of the financial crisis, the price of natural rubber in China, like the international price of rubber, has staged a plateau dive, and both declines are basically synchronized.

market conditions

Since August 2008, the financial turmoil in the international market has caused the price of natural rubber in China, which has been running at a high level, to decline sharply all the way. From the highest of 28,000 yuan per ton (RMB, the same below), the lowest of about 8,000 yuan. Especially from September to October, the price of rubber fell more than 10,000 yuan in a short month, which is rare in history.

In December 2008, the price trend of natural rubber at home and abroad was basically the same. The decline continued in November in the first ten days. In the middle and late ten days, market prices stopped falling and rose rapidly due to the policies of price protection, export restriction and national storage introduced by Thailand, Indonesia and Malaysia. In 2009, the State Reserve Bureau made a strategic decision to buy agricultural reclamation natural rubber at a preferential price in batches, which increased market confidence. In addition, all domestic natural rubber producing areas entered a period of shutdown, short-term supply shortage and inventory reduction, which made the market gradually recover. At the beginning of March, the transaction price per ton was about 14,000 yuan.

The price of natural rubber has fallen sharply, causing serious losses to rubber farmers. It is understood that Hainan produced more than 270,000 tons of rubber in 2008, of which more than 160,000 tons were produced annually by agricultural reclamation. The price of rubber fell sharply, and the profit of rubber farmers and agricultural reclamation in Hainan shrank by more than 50%. In Xishuangbanna, China's second largest natural rubber production base, the average price of 24,000 yuan per ton from March to mid-September 2008, and the average monthly dry rubber production from June to September 2008, the income of private rubber farmers in the whole state evaporated nearly 140 million yuan in October alone due to the sharp drop in rubber prices.

In recent months, China's imports of natural rubber have also fallen sharply. In November 2008, imports totaled 12.5 tons, down 19.4% from a year earlier; in December, imports of 10.9 tons, down 25.94% from a year earlier; in January 2009, imports fell 65.4% to 60,000 tons from a year earlier, with imports from Shandong Province, a major tyre producer, falling by 85.4% in the same month.

The sharp decrease in rubber price and import is mainly due to the extremely shrinking market demand for natural rubber. According to reports, at the end of last year, the start-up rate of large tire enterprises in Shandong Province was only 60-70%. Most of the manufacturers had two months'production in stock, and some tire factories were on the verge of bankruptcy. In addition, the orders of tire enterprises, gloves and sanitary products enterprises in Jiangsu, Zhejiang and other places have also been greatly reduced.

Favorable factors

When the financial crisis raged and the natural rubber industry suffered losses, the industry also ushered in some warmth - the newly issued national policy has a certain stimulating and stabilizing effect on the market.

China's Reserve Rubber Stabilization Market

In the first half of 2008, natural rubber brought considerable wealth to rubber farmers, but its "gold content" gradually declined from July, and the unit price even fell to the lowest price since 2001.

On February 18 this year, the State Material Reserve Bureau signed a national rubber reserve agreement with Hainan Agricultural Reclamation and Yunnan Agricultural Reclamation, and will complete 105,000 tons of rubber storage plan in six months. Among them, the amount of reclamation in Hainan is 55,000 tons, and that in Yunnan is 50,000 tons. According to the agreement, the reserve products will be delivered in batches. It is understood that the price of the first batch of natural rubber is 14.6 million yuan per ton. In addition, according to the market environment, if the price of gum is at a low point, the State Reserve intends to increase the quantity of gum storage in the second half of this year as a strategic reserve.

It is reported that from October 16 last year, Hainan Agricultural Reclamation, in order to protect the interests of rubber workers, purchased dry rubber products at a protective price of 12,000 yuan per ton, but Haijiao Group lost more than 2 million yuan per day. This phenomenon attracts the attention of the central government. In order to protect the national strategic materials, protect the healthy development of natural rubber industry, stabilize the market and safeguard the interests of rubber workers, the State Reserve Bureau has made a decision to purchase natural rubber products.

China's storage and storage plan will provide strong support for the sustained recovery of rubber prices. It will play a positive role in stabilizing the rubber market, in the operation of rubber production enterprises and in increasing the income of rubber farmers.

Automobile Industry Policy Promotes Market Demand

The Ministry of Industry and Information Technology of China has issued a bulletin to solicit public opinions on the implementation and improvement of the Development Policy for the Automobile Industry. If implemented, it will increase automobile sales, drive the demand for tires, and then benefit the natural rubber market.

On January 14, the executive meeting of the State Council adopted the "Planning for the Adjustment and Revitalization of the Automobile Industry", introducing a reduction of vehicle purchase tax by 5% for vehicles with 1.6 litres or less displacement; supporting large automotive enterprise groups to merge and reorganize, supporting key automotive parts enterprises to expand their scale through mergers and reorganizations; and implementing the strategy of new energy vehicles.

On February 5, the Ministry of Finance announced the new energy vehicle subsidy standard. Among them, passenger cars and light commercial vehicles can receive subsidies ranging from 4,000 yuan to 250,000 yuan depending on fuel saving rate and technology, and urban buses over 10 meters can receive subsidies ranging from 50,000 yuan to 600,000 yuan. The above measures have a great boost to domestic automobile sales.

Countries around the world have also launched a series of rescue actions for the automobile industry, for example, the United States has implemented 17.4 billion yuan.