The rubber industry has a dual driving force
- Jul 28, 2017 -

For the rubber industry, the tire industry, industry and other supporting material of carbon black rubber industry, the rubber products are widely used in industry, agriculture, transportation, aerospace and daily life. In recent years, the rubber industry in China with the domestic economic growth has been rapid development, and has become the rubber products producing countries, including a variety of products output ranks first in the world, and for many years in the world natural rubber consumption first. Therefore, the price of natural rubber will affect the profitability of China's rubber industry. In the past few years, due to the strong demand for natural rubber in China, the price of natural rubber continued to rise, and the profitability of China's tire industry declined. But because of the high price of natural rubber, Southeast Asian countries have increased the cultivation of natural rubber. According to statistics, the 9 countries represented by Malaysia, in 2003 the new planting area of 500 thousand mu, by 2008, reached 3 million 500 thousand acres. Since natural rubber growth period is 7 years, natural rubber planting began in 2003 began to enter the harvest period, so in 2010, after 2010, natural rubber prices began to highs, currently only more than 270 U.S. dollars / ton, the high point of $540 / ton fell 50%. Moreover, this also shows that in the next few years, natural rubber prices difficult to recover, after all, in 2008 the new 3 million 500 thousand acres in 2015 also began to enter the harvest period.

The data show that natural rubber accounts for higher cost of related rubber products. Take tires for example, natural rubber accounts for about 30% of the total tire cost. As Fengshen shares [-7.22% funding research report], natural rubber accounted for the cost of raw materials has reached the proportion of 37%, synthetic rubber accounted for slightly lower, 17%. Therefore, a substantial drop in natural rubber prices will greatly ease the cost pressures in the tire industry. Similarly, in the field of conveyor belts, the most important raw material is rubber, in which double arrow shares [-4.45% Capital Research Report] in 2007, natural rubber accounted for the proportion of raw material costs as high as 37%. To this end, the decline in natural rubber prices, is conducive to the profitability of all rubber products companies to improve.  Downstream demand supports product prices

However, there are also concerns in the industry, the decline in raw material prices will lead to lower prices of end products. From an industrial point of view, there really is such a logic. However, in the field of industrial rubber products, product prices fell sharply and the possibility is not big, not only from the majority of high-end products, such as rubber seals and other fields, because of the high technology threshold, can enter the enterprise product prices is not too much, the pressure is not great; but also because of the downstream demand, improve product prices high expectations. Among them, the automobile tires, for example, at present, China's car ownership has exceeded 100 million mark, the industry estimates that the next 10 years will break through 200 million. A substantial increase in car ownership will greatly boost demand for alternative tyres, the main market for domestic tyres. In addition the per capita China now, every 13 people have a car, France every 2 people have a car, we are still far below the level of developed countries, the future of the automotive industry still has great development space, which means that the automobile tire industry needs to be continuous. Moreover, the development of the automotive industry has a strong demand for rubber seals and other products.

At the same time, 50% of conveyor belt products are used in coal mines. According to industry planning, the state will continue to integrate resources for the development of large coal production base, production base and cultivating large enterprise groups, in order to achieve the optimal allocation of coal resources and production capacity, the coal industry to focus on large and medium-sized coal enterprises, will increase the demand for conveying belt. Thus, Bao Tong with industry related stocks such as the market demand is still optimistic. Look for opportunities from technology and needs