Natural rubber is expected to return to the rising trend

Tiago has multiple bullish factors: floods lead to supply shortages, heavy truck demand for the better, rising tires show that the downstream demand is acceptable, synthetic rubber rose behind the natural rubber is another heavy power.
We believe that natural rubber in the completion of a wave after the callback, there is hope to return to the rising trend.

2016 after the second half, synthetic rubber set off a wave of rising tide.
Styrene butadiene rubber from the low of 9600 yuan / ton all the way up, as of February 2017, SBR 1502 rose to 25,000 yuan / ton, or up to 160.42%.
And Shun is the rally, from 9700 yuan / ton low start, all the way up to February prices have risen to 26,000 yuan / ton area, or 168.04%.

raw material prices to promote the rise of synthetic rubber is the main reason.
Butadiene is the most important raw material for synthetic rubber.
Synthetic rubber in the most important two varieties: butadiene rubber from butadiene synthesis, styrene butadiene rubber and butadiene synthesis of styrene.
The rise in the synthetic rubber, and butadiene prices rose solidarity.

Butadiene prices are more eye-catching than synthetic adhesives.
June 2016, butadiene of Sinopec East China offer is still 8,000 yuan / ton below.
But in June, butadiene prices suddenly leaped, since then out of control, to mid-February, butadiene prices have risen to 24,300 yuan / ton, or 203.75%.

Of course, when the price of butadiene is high, there are other ways to produce butadiene.
2011 – 2013, some manufacturers on the use of liquefied petroleum gas in the oxidation of hydrogen peroxide dehydrogenation process to obtain butadiene.
But in the long run, the production process of butadiene is still based on the integration of naphtha.

US shale oil revolution is an important reason for the supply of butadiene.
As the United States shale gas ethane content increased significantly, the rapid increase in ethane production, so a large number of ethane as a high-quality raw materials for cracking ethylene.
Since 2010, the United States cracked ethylene plant which gradually increased the proportion of ethane feed, the corresponding proportion of by-produced butadiene reduced.
The recovery of oil prices will likely lead to a large increase in shale oil, resulting in more ethane, resulting in the ethane cracking process will squeeze naphtha cracking process phenomenon, so the supply of butadiene in the future will be more tense.

From the above point of view, the supply bottleneck of butadiene led to the increase in the production costs of synthetic rubber, thus promoting the price of synthetic rubber.

The replacement between synthetic rubber and natural rubber is not as high as expected by the market.
Synthetic rubber is mainly used in semi-steel tire, which is mainly to see the passenger car market, and natural rubber is mainly used in all steel tire, which is mainly to see the truck market.
Although there can be an alternative relationship between the two (tire adjustment can change the proportion of the relationship between the two), but the proportion is limited.

in the past a lot of time, synthetic rubber prices should be lower than the price of natural rubber.
Because synthetic rubber is refined through the petrochemical industry, can have a relatively high supply flexibility.
The natural rubber is produced by the rubber tree tapping, while the rubber tree growth cycle of up to 5-7 years, the supply elasticity is small, so the price of natural rubber has been higher than the price of synthetic rubber.
Only in a very small number of cases can be higher than the situation of synthetic rubber: one is the 2008 financial crisis, commodity prices generally fell, natural rubber futures decline faster, more than synthetic rubber decline, resulting in synthetic rubber price ratio
Natural rubber prices to be high; there is a mid-2011, due to raw rubber raw material prices rose, causing synthetic rubber all the way up, almost equal to natural rubber prices.
Natural rubber prices are weak, the middle of a period of time the price of synthetic rubber even more than the price of natural rubber.
And the general natural rubber is less than the situation of synthetic rubber will not last long.
And according to this practice, we judge the price of glue in the synthetic rubber is still strong background, it is difficult to unilateral decline.

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