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Why domestic rubber market sees sudden plunge?

Natural rubber dropped over 7% to lead declines in the futures market on Sep. 28 to drop, coming to an all-year low.

Global natural rubber supply grows fast in 2017, while market demand increases slower. The supply is in excess.

Accordingly, natural rubber market expectation turns from bullish to bearish, investors’ sentiment becomes passive.

Latest report shows that global natural rubber output rose 5.2% year on year in the first eight months of this year to reach 8.04 million tons.

In contrast, global natural rubber consumption in the first eight months only inched up 0.6% to 8.54 million tons. China’s consumption dropped 2.2%.

It is predicted that global natural rubber output in 2017 will increase 4.8% to 12.86 million tons, while the consumption will only climb 1% to 12.8 million tons, leaving 600,000 tons in excess.

China’s imported 560,000 tons of natural rubber and synthetic rubber in Aug., up 19.1% year on year, or 19.1% from July.

In the first eight months, China’s natural rubber import totaled 4.45 million tons, up 24.3%.

An industry analyst said the most actively traded contract Shanghai Rubber 1801 will continue declining in the short term and the condition of domestic rubber market will be serious for a while.