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Promising NR Market in 2017
The NR market rallied in 2016 and boomed in Q4, 2016. The NR market started to rebound greatly in September and skyrocketed in November. The NR dominant contract at SHFE reached RMB 21,760/mt. However, the NR market fluctuated downwards with the coming Spring Festival. The current NR market lacks upward momentum.
According to SCI, most downstream users started to stock up after the New Year holiday and most of them finished purchasing before January 10. Inventories at most large and medium-sized downstream users could be consumed for 15–20 days. Moreover, most downstream users will take 7–15 days’ holiday during the Spring Festival. Some producers’ holiday may last for 20 days or so. From January 21, downstream producers and traders entered the holiday. The NR market has become stagnant.
Most market players are bullish about the market after the Spring Festival.
Thai floods become the key influencing factor in 2017’s NR market. It has been the worst in recent 30 years. The fold has damaged the NR production and transportation. It is predicted that the NR output would decline 6%–10% Y-O-Y.
2. Traditionally, Thailand, Malaysia, Vietnam and Indonesia will stop tapping from February to April. However, some flooded areas entered the non-tapping period in advance and that period might prolonged.
3. Around the mid-February, downstream tire and rubber products producers will restart and the demand for NR will improve. A purchasing peak will appear. Furthermore, the sales of heavy-duty truck in 2017 will be satisfactory as that in 2016.
4. Strong butadiene and synthetic rubber markets support the NR market. As a lot of butadiene units will undergo maintenance in H1 2017, market players are bullish about the coming butadiene market. Synthetic rubber market will be firm, which will somewhat stimulate the NR market.
The major reason for the great declines in NR prices was that the Thai auction on NR influenced the market players’ sentiments. It is most likely for the NR market to move up after the Spring Festival.
All information provided by SCI99 is for reference only, which shall not be reproduced without permission.

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