Rubber reversal is hard to come by

"The higher the climb, the more pain it plucks." This spell almost completely sums up the fierceness of rubber from the moment of the moment to the end of the road.

After reaching a historical peak of RMB43,293/ton on February 9, 2011, only by the end of the year, the Hujiao Index had been “blocked and broken” to RMB 24,221/ton. What makes the rubber farmers even more painful is that the oversupply leads to “this is a constant trend.” Following the turmoil in 2012, the price of rubber fell by more than 30% in 2013. In 2014, it continued to stage a drama of “slumping”. With more than 32% decline in sales during the year, it became the bear market for the commodity market. The 12,300 yuan / ton has shrunk more than 60% from the historical high point.

This round of rubber plunge, which has taken four years, has even fallen below the “cost support” that has been talked about in the market. Everyone is asking whether the “big bear market” is nearing its end. Where exactly is the bottom? Regrettably, many analysts believe that in 2015, the global rubber industry will still face the dilemma of “oversupply and weak demand”, and the price of rubber will remain low, and it is difficult to reproduce the miracle of “V-shaped” reversal.

2014: Breakdown of cost support

Since the opening of the bear market pattern in 2011, rubber has not regained its abyss-like nightmare. Its price has broken through layers of barriers and it has even fallen below the 12,000 yuan/ton cost line during the year, hitting 11,600 yuan/ton. The year's low.

According to statistics from the China Securities Journal, as of the close of December 24 this year, the Wenhua Hujiao Index had plummeted from RMB 18,255/ton at the beginning of the year to RMB 12,300/ton, with a cumulative drop of up to 32.34%, exceeding the annual decline in 2013.

“The increase in downward pressure on China’s economy has led to a noticeable decline in demand. Although the rubber-producing countries have actively taken measures to intervene in the price of rubber and slowed down the supply rate, they have not been able to eliminate the negative impact of weak consumption. Supply and demand have continued to be in an imbalanced state, causing the price of rubber to oscillate downward. "Researchers said that while Hujiao also had seasonal advantage in the busy season, but in the face of high stocks and the huge amount of rubber-producing countries, the rebound of the price appeared to have a scrupulous and incompetence, and the upside was limited.

The researcher pointed out that under the background of the continuous exit of QE abroad and the domestic deleveraging structure, the market focus of the natural rubber market with excess supply and demand continues to shift downward. Policy factors have once affected the short-term rhythm, speculative funds have contributed to fueling, and Hujiao has again become a leader. pioneer.

He believes that while global natural rubber supply is in a period of large production increase from 2013 to 2015, while the Growth of consumer-controlled emerging economies is slowing down, the bear market structure dominated by the overall supply-demand surplus is very clear, while the seasonal supply season superimposes Thailand. Reserve stocks accelerated the decline in the price of rubber. In 2014, the global natural rubber market continued to decline.

The researcher also stated that the main negative factors that led to the “rebound” in rubber prices in 2014 were the weakening of the Chinese economy, the panic of the domestic real estate market turmoil, the excess supply of natural rubber in the world, the rumors of Thailand’s dumping, and the resumption of China’s standards for compound rubber. Adjustments, continuous plunge in crude oil, etc.

"Oversupply" dominates the bear market

Most people in the industry believe that in the context of oversupply, the rubber market will remain in a bear market structure as a whole. At the same time, the supply-side cost-reducing effect, storage and storage policy, demand-based compound rubber standards, tire "double reverse" and other factors will have a significant impact on the price of rubber in 2015.

Fortunately, in the past three years, although global natural rubber has generally maintained the pattern of oversupply, the surplus has shown a tendency of narrowing year by year. According to public information, in 2015, the global supply of natural rubber will still shrink. IRSG expects that the global excess supply of natural rubber will decline to 202,000 tons in 2015, compared with 371,000 tons in 2014 and 650,000 tons in 2013.

Unfortunately, at present, the downstream demand for the global rubber market will remain weak. In 2015, "internal and external problems" will further aggravate the pattern of overcapacity in China's tire industry.

"On the one hand, due to the domestic macroeconomic downturn, the domestic tire market demand is likely to remain sluggish, and the domestic sales situation is hard to be optimistic. On the other hand, due to the rise of international trade protectionism, the United States has investigated the "double reverse" of Chinese tires, Brazil, Egypt, Russia, Belarus, Kazakhstan, customs unions, etc. are also around the corner, China's tire exports are facing a huge impact, the situation is increasingly tough for export.” Hu Hua said.

Combining with the low operating rate in the tire industry, high social inventory, and signs of shrinking natural rubber imports, Chen Dong pointed out that in the context of domestic economic restructuring, and the growth rate is facing a downward trend, it is indeed the end of this year's domestic natural rubber terminal. The demand is not ideal. The pace of economic reforms will continue next year, and the deceleration in growth rate will be a high-probability event. Therefore, the pain caused by natural rubber consumption will not be small, and the demand outlook is not optimistic.

In general, for the domestic Hujiao ** market in 2015, its negative factors come from four aspects: First, next year, the strong dollar will continue to suppress commodities and become one of the biggest negative factors; Second, China's economic growth rate. Faced with the pressure of continued downward pressure, terminal demand will further decline next year. Third, the preliminary ruling of the United States’ China’s tire “double reverse” case will have a great impact on the domestic tire industry and even the natural rubber industry. Fourth, global natural rubber The oversupply expectation will also suppress the continued weakness in the price of rubber.

2015: Weak and struggling

Looking ahead to 2015, industry sources said that taking into account the global economic development trend, the rubber bear market is not yet over. The low price of rubber prices will become the main theme of next year.

“In 2015, natural rubber prices entered the end of this wave of big bear markets since 2011. The global rubber industry has entered the most difficult period and is likely to experience similar situations around the end of 2008, but it cannot repeat the “V-shaped” reversal of the year. "The miracle." Researcher expects that next year Hujiao main contract price fluctuation center of gravity will be in the vicinity of 10,000 yuan / ton line, the highest point to see the 15,000 yuan / ton line, the lowest point to see 7,000 yuan / ton line.

He pointed out that the current simple reliance on stimulus policies has been unable to effectively boost demand in the commodity market, and the global supply and demand structure of the natural rubber industry has determined the price trend. In an environment where end-user demand is unlikely to improve significantly, only from the supply side will it be possible to improve the current pattern of excess supply.

"Overall, China's natural rubber prices are centered on continued downward movement in 2014. Before the capacity-reduction road has reached the end point, it is expected that the domestic Hujiao trend will continue to maintain its "soft" sheep characteristics next year. Hujiao 1505 contract rubber price center will remain within the range of 10,000 yuan to 16,000 yuan / ton." Researcher also pointed out that, on the bullish side, investors can only hope that the rubber-producing countries for the price of plastic intervention can be effective, and the cost Support factors also to a certain extent, curb the low price of rubber. In addition, the Chinese government has exceeded expectations in terms of purchasing and storage policies and monetary policy. At the same time, natural disasters and extreme climatic factors will become the source of speculative capital speculation for the price of rubber, and thus create the emergence of short-term rally.

Chen Dong suggested that investors should take advantage of emergencies to take advantage of the trend of trading, holding short positions should be diminution to lighten up. Because of the cost factor, the risk ratio of the proceeds that continue to short the rubber price fell. Operate on the box to consider the shock, pay attention to position control, set a good stop. Based on the analysis of the shock market, the use of hedging and arbitrage operations is still the dominant mode of profit. Among them, the arbitrage trading of internal and external rubber hedges has high operability and is worthy of investors' participation.

**The agency further pointed out: “Maybe it will not take until the rubber farmer cuts down the gum trees, the long-term supply of natural rubber can be reduced, or the introduction of macroeconomic policies will greatly boost the downstream demand, and it will be possible to make the rubber price completely out of the bear market. Otherwise, even if the downside has been limited, I'm afraid that the rubber price will need to stay at the bottom for a while."