Tireworld Insight: Shanghai rubber to see short-term “microbalance” fluctuation

Rubber futures traded on the Shanghai Futures Exchange (SHFE) is expected to enter a period of “microbalance” fluctuation, with short-term resistance at 14,000 yuan per metric ton, an analyst with the Everbright Futures noted.

The Shanghai rubber contract price rebounded on Thursday (2014-7-17) after better-than-expected macro-economic data were released.
The benchmark natural rubber contract for delivery in September closed 1.53 percent higher at 14,235 yuan/tonne on Thursday, after hitting the intra-day high of 14,265 yuan/tonne at noon.
The National Bureau of Statistics (NBS) on Wednesday reported a GDP growth of 7.5 percent for the second quarter, higher than the 7.4-percent growth in the first quarter, suggesting the country's economy is improving.
The recent gains in crude oil prices might constitute another force to underpin the rubber prices, observers say.
The U.S. crude oil stockpiles fell to 375 million barrels for the week ended July 11, topping market expectation, according to the Energy Information Administration (EIA).
Analysts believed that as the summer driving season came, the sharp drop in inventories suggests the demand for oil was stronger than expected.
Light, sweet crude for August delivery moved up 1.24 dollars to settle at 101.2 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude for August delivery lost 17 cents to close at 105.85 dollars a barrel.
Meanwhile, the fundamentals for the natural rubber futures market, however, are very likely to deteriorate in the remainder of 2014, said analyst Chen Ruibi with Shanghai CIFCO Futures.
The natural rubber supply is to peak shortly as a traditional practice for this period, while its downstream sectors, especially the auto manufacturing, are slowing down.
The rubber stockpiles in the Qingdao bonded area roughly stood at 485,300 tonnes, demonstrating that the problem of over supply is still prominent.
(Edited by Olivia, olivia@tireworld.com.cn)