Benchmark natural rubber contract on Shanghai Futures Exchange (SHFE) ended 0.65 percent higher on Friday, amid a cross-board hike of the rubber contracts. The supply of natural rubber is relatively tight at present, with delayed and slack tapping in China and just-started tapping in Southeast Asia.
By May 15, the rubber inventories in Qingdao tariff-free area stood at 195,000 tonnes, down 8.4 percent from the end of April. The figure has kept declining since March. Rubber inventories in SHFE have also been reducing since the Spring Festival in mid-February of this year.
They are expected to keep falling before July according to past experiences. China's rubber import saw falling like-for-like growth in the first three months of this year, because the foreign rubber prices were higher than the domestic one and Chinese tyre makers had high inventories of the raw material.
In the meantime, the tyre makers in China have resumed the general operation rate to a normal level, indicating a higher demand for the natural rubber. Analysts warn the market to pay close attention to the El Nino, which can cause droughts in Southeast Asia and bring down the rubber output.
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