Demand shrinks The demand for tire processing in domestic natural rubber has not been able to start, which has exacerbated the imbalance between supply and demand in the spot market, which has exerted tremendous pressure on natural rubber prices. It is expected that this situation will continue until the Spring Festival. Since the beginning of January 2014, Hujiao 1405 contract has maintained a short-term trend, unilaterally fell, as of January 8th closing, Hujiao fell for three consecutive trading days has reached 5.05%. From the point of view of the spot, the lack of demand has once again become apparent. In addition, the overstocking of supplies and excess supply are the root causes of the plunge in rubber prices. Tire plant operating rate continued to be low Due to the tightening of the domestic economy in 2013, near the end of the year, the operating rate of tire companies has dropped significantly. The data shows that in December 2013, the official PMI index was 51.0 and the HSBC PMI index was 50.5, all slightly lower than the previous month. This means that after entering the winter, China's manufacturing activity as a whole has experienced a seasonal fall. Of course, tire companies are no exception. Since November last year, as the weather turned cold, tire companies have begun to arrange maintenance and rest. Starting in December, the operating rate of tire processing plants in Shandong decreased from 80% to 70%. This situation became even more pronounced in January 2014. The average operating rate of all-steel tire production lines only maintained 65%, and some small-sized tire factories started. The rate is less than 50%. Due to the small amount of domestic sales for small tire companies, only a small amount of export orders remain. Therefore, the recent start of the main stock-based reserves, so that the demand for natural rubber is even more light. Factories are cautious in stocking raw materials According to the previous production habits of tire companies and the inherent trade cycle of natural rubber, the downstream companies will stock materials such as natural rubber at the end of each year. However, the situation in 2013 was different from previous years. First of all, domestic funds were significantly tight in 2013, and the inter-bank lending rates at the end of the year remained at around 5%. After entering 2014, this situation has still not improved. Compared with the 3.5%-4% interest rate environment in the same period of last year, the current funding situation makes companies feel very pressureful. Therefore, although it has entered the new year, the company is still continuously returning funds and reducing inventory. Second, downstream orders are expected to be insufficient. According to the survey conducted by the China Automobile Dealers Association on the market performance in January 2014, car dealers are generally cautious. The proportion of dealers who saw much of domestic auto demand fell from 57.0% to 35.6%. On the other hand, dealers whose car demand was bearish had a significant increase, from 4.9% to 25.0%. The lack of auto market will certainly be passed on to the tire industry. It can be foreseen that the demand quantity of accessory tires in the future will likely decrease, which will intensify the mentality of tire manufacturers to bearish, and it is expected that the inventory of rubber raw materials will remain low. It is understood that the procurement is extremely cautious, and it is generally based on on-demand procurement. At present, the raw material inventory cycle of some tire companies in Shandong is around 15-20 days, even lower than the stock level last November. Circulation link inventory pressure In November 2013, the number of natural rubber imports in China suddenly increased to 269,000 tons, an increase of 41.6% from the previous month, which was due to the pre-judgment of the trading companies' demand for stockpiling tires. However, after entering December, the procurement situation of tire companies was significantly lower than expected, which led to a rapid increase in natural rubber circulation stocks in Qingdao Free Trade Zone. As of the end of 2013, the total amount of rubber inventories in Qingdao Free Trade Zone has reached 291,000 tons, an increase of 14.6% from the beginning of November. Moreover, the growth of such inventories is obviously passive, and it cannot boost prices. Instead, it will further suppress natural rubber prices. In summary, the demand for rubber processing in domestic rubber has been delayed, which has aggravated the imbalance between supply and demand in the spot market, which has exerted enormous pressure on natural rubber prices. It is expected that this situation will continue until the Spring Festival. Therefore, natural rubber prices will continue to show a downward trend. Even if there is a rebound, the intensity will be limited. Hydraulic Fittings,Hyd Fittings,Hydraulic Adapter Fittings,Hydraulic Adapters HUAIAN YATAI HYDRAULIC MACHINERY CO., LTD , https://www.yataihydraulic.com