Rubber Price may Hit an All-year High

China’s rubber price surged after the National Day holiday and drew tire companies’ attention.

After rising for days, the price of rubber contract 1701 in Shanghai Futures Exchange has exceeded 14,000 yuan/ton. An industry insider estimates that the next benchmark price might be 16,000 yuan/ton.

Rubber price keeping rising in the final quarter of this year has become very likely and may hit an all-year high soon.

Stimulated by rising natural rubber price, prices of butadiene and synthetic rubber have also risen by around 20%.

Although natural rubber price increased sharply lately, the feel-good factors in the short term still exist.

Dropping RMB and JPY and rising crude oil price are prerequisites for higher rubber price.

Bad weather in natural rubber producers, Thailand in particular, may affect its supply later.

The administrative authority of rubber in Thailand said lately that affected by natural disaster, the country’s rubber output may decrease 20% from the previous year.

But market demand changes little in the short term and the inventories in the free trade areas kept lessening.

The downstream tire producers’ capacity utilization keeps rising, and both the output and sales are good.

Raw material price hike led to higher costs, some tire producers have decided to lift their product prices.

Vigorous demand in the end market fueled the confidence of buy orders in the futures exchange.

Within two days after the National Day holiday, more than 1 billion yuan flew in rubber futures in Shanghai Futures Exchage and pushed up rubber price.