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Technology Research and Development
Technology Research and DevelopmentThe testing center covers a total area of 3,000 m² and employs over 50 engineering and technical personnel. It is equipped with more than 60 sets of experimental and analytical instruments, including physicochemical and material‑property laboratories. The center can conduct comprehensive performance evaluations for a wide range of rubber materials, compounded rubbers, and finished products. By providing precise data for material quality control and product‑specific property testing, the testing center plays a pivotal role in material selection, formulation development, and the enhancement of product performance.
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With a 10% pullback already in place and global inventories being depleted, can rubber spark a broader rally?
Reason for the recent adjustment:
The catalyst for this round of adjustments stems, on the supply side, from two expectations: a decline in raw material prices and an anticipated build-up of domestic inventories as shipments concentrate at ports in December. On the demand side, the onset of the off-season has exerted downward pressure on bullish sentiment.
Currently, both exports and production remain relatively strong, though there are some signs of weakening—primarily reflected in a slight decline in the operating rates of all‑steel tire manufacturers and a build-up of finished‑goods inventories. With the industry now entering the off‑season for tire demand, market expectations also point to potential price declines in the period ahead.
This year, volatility in the natural rubber market has remained relatively low. The slight uptick in volatility at the end of August was driven by synthetic rubber, while a limit-up move in natural rubber helped boost market sentiment. Over the full year, volatility has stayed subdued, similar to 2022. With bullish confidence weak and a contango structure in place, natural rubber is well-suited for shorting.
Rubber Production and Inventories:
This year’s El Niño has already taken hold, leading to a slowdown in the growth of rubber trees during their dormant period, which in turn affects both the quantity and quality of new leaf flushes and delays the onset of tapping—effects that are already being observed in practice.
In March, during my field visit to Yunnan, I found that many processing plants were out of adhesive and unable to operate. I also learned that parts of Vietnam are experiencing drought, which has already delayed the start of tapping. Following the onset of tapping, El Niño can reduce chlorophyll synthesis, inhibit photosynthesis, and ultimately lower the per‑tree yield of rubber trees. As a result, this year many major natural rubber‑producing regions have been disrupted by adverse weather conditions.
This year, Thailand has been a marginal factor, as the country has experienced relatively abundant rainfall. In late April, Thailand even endured extreme heat, triggering drought conditions and delaying rubber tapping.
The Thai baht has depreciated to some extent, and substantial adjustments to Thailand’s minimum wage have driven labor costs steadily higher. Tapping rubber is increasingly being abandoned by younger generations, while experienced rubber tappers are gradually leaving the workforce. Against this backdrop, raw material prices in Thailand have remained persistently high this year.
A leading indicator of whether Thailand will cut production is the price of raw materials: if raw‑material prices decline, it suggests a relatively ample supply; if they remain firm, it points to shortages, and high input costs can severely squeeze processors’ margins, leading to a corresponding drop in finished‑rubber output.
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