Thailand's plan to buy rubber will boost China's imports

The Thai government has announced that it will acquire up to 200,000 tons of rubber to support the rise in rubber prices to more than 379 cents, which is at least 10% higher than the current spot price. Investors worry that traders will increase imports to reserve enough stock before prices rise. The situation became favorable.

The February crude oil contract on the New York Mercantile Exchange fell sharply. A union leader in Nigeria stated that workers on the oil platforms have entered the red alert and are ready to close production facilities. As the government abruptly suspended US$7 billion in fuel subsidy projects, which led to soaring fuel costs, the domestic situation in Nigeria has become tense. However, the U.S. Department of Energy data is bad. Last week, crude oil inventories in the United States increased by 5 million barrels, which was much higher than the expected increase of 1.1 million barrels. Moreover, the increase in gasoline and distillate stocks also exceeded expectations and the price of oil fell. The drop in crude oil will reduce the cost of synthetic rubber and will be detrimental to the natural rubber market.

Weather conditions, natural rubber producing areas in Thailand, clear and cloudy in the north-central part of Thailand, rain in the south; Malaysian areas, rain in the southern part of the Malay Peninsula, rain in the northern part of Kalimantan; Indonesia, Sumatra has rain in the north of the equator, There is rain south of the equator in Sumatra, rain in the southern part of Kalimantan, Chinese rain, rain in Hainan and showers in Yunnan. Recent weather has little effect on tapping production and transportation.

In Asian rubber market, the spot price rose in the previous trading day. Traders said that the market was very active, but China’s counter-offer price was still too low. Chinese traders are also working hard to clear the market, and the market is under some selling pressure, and prices are hard to accept. The Thai No. 3 smoke tablet Adhesive RSS3 reported in January/February was reported at 343-345 cents per kilogram. On the 12th, Malaysia's standard rubber SMR20 February FOB official quotation rose slightly in the morning, and the Shanghai natural rubber futures May contract rose 0.98% in the morning.

In other respects, Thai Government and Farmers Association officials stated that the Thai government may purchase up to 200,000 tons of unsmoked film to increase the price to 120 baht (US$3.79) per kilogram. The intervention project needs to be approved by the National Rubber Council composed of ministers and government officials on January 17 and approved by the Cabinet on January 24. Officials also pointed out that the prices of rubber in February and February are usually rising, and supply is low for seasonal reasons. However, if the target price is not reached, the government will definitely intervene. Thai government intervention will increase the recent price of rubber.

In general, the commodity market is seeking to rise. The pressure on the European crisis has dropped significantly and bond auctions have progressed smoothly. Both Italy and Spain are expected to pass smoothly. In addition, after Fitch affirmed the French rating, S&P has not stated that it will downgrade the French rating. The pressure on European ratings is not serious, at least compared to the end of last year. The external situation is favorable to the rubber market. Thailand’s intervention in rubber prices has attracted investors’ close attention. Driven by the interests of the rubber farmers, the Thai government is prepared to acquire up to 200,000 tons of rubber to drive prices up to 379 cents, and the current price is 343 cents. This means that there is still much room for growth in rubber prices. If traders are nervous about this, they will also expand imports before the Thai government. The situation looks good.