Although the strong upward trend in the rubber market since August has come to an end and prices initially declined, the market remains supported by tight supply-demand dynamics and persistently high oil prices. As a result, rubber prices have remained relatively stable across different types. It is expected that this supportive environment will persist for the near term, with price fluctuations becoming the norm rather than the exception in the coming months.
In 2005, domestic rubber resources saw a slight increase. According to statistical data, the total new rubber resources produced in the first three quarters of the year reached approximately 3.43 million tons, representing a 4.7% year-on-year growth. Natural rubber production was around 1.42 million tons, up 5.6%, while synthetic rubber output stood at 201 million tons, showing a 4.1% increase. In September alone, new resources added about 470,000 tons, marking a 13.2% rise compared to the previous month.
However, China’s natural rubber production faced challenges due to severe natural disasters. The main producing region of Hainan experienced typhoons followed by droughts, leading to reduced output in some areas. By the third quarter, domestic natural rubber output was estimated at 430,000 tons, a decline from the previous year. With the fourth quarter being a low season, annual output is expected to reach about 590,000 tons, lower than the previous year’s level.
On the other hand, synthetic rubber production grew steadily throughout the year. In the first three quarters, the national output of synthetic rubber reached 1.19 million tons, up 9.5% year-on-year. Output in September alone hit 139,400 tons, reflecting a 17.4% increase. The second half of the year saw a significant surge in production compared to the first half, with annual output expected to reach approximately 1.6 million tons, a rise of around 8% from the previous year.
Total rubber production nationwide during the first three quarters reached approximately 1.62 million tons, up 6.3% year-on-year. Overall, all types of rubber production are expected to reach around 2.2 million tons for the year, marking a 5.7% increase compared to the previous year.
China’s rubber imports remained slightly positive in 2005. Customs data showed that the country imported 1.81 million tons of various types of rubber in the first three quarters, a 2% increase year-on-year. This contrasts with the sharp increases seen in previous years. However, import volumes surged significantly in the third quarter, with September seeing an import of 247,900 tons, up 13.8% from the previous month and 17.7% year-on-year. Both natural and synthetic rubber imports showed steady growth, with natural rubber imports reaching 990,000 tons (up 7%) and synthetic rubber reaching 820,000 tons (up 2.8%) over the same period.
Domestic demand for rubber remained robust as China's economy continued to grow rapidly. GDP in the first three quarters rose 9.4% year-on-year, while fixed-asset investment, industrial output, and foreign trade maintained strong momentum. Tire production, in particular, saw a sharp increase, with 223.8 million units produced in the first three quarters, a 29% rise from the same period last year. In September alone, tire output reached 242.7 million units, up 19%. Annual production is expected to approach 300 million units, a 5% increase.
With the strong growth in rubber product output, domestic consumption of rubber also rose sharply. Total rubber consumption in the first three quarters exceeded 3.6 million tons, a more than 15% year-on-year increase. Natural rubber consumption reached or surpassed 2 million tons, while synthetic rubber consumption exceeded 1.6 million tons. Consumer demand remained strong, driven by the expanding industrial and automotive sectors.
Market prices continued to rise due to tight supply-demand conditions and soaring oil prices. According to the Ministry of Commerce's monitoring system, the average price of natural rubber No. 5 in key regions reached 16,350 yuan per ton in September, up 28.3% from the start of the year. Rosin-based styrene-butadiene rubber averaged 14,925 yuan, up 11.6%, while butadiene rubber averaged 15,720 yuan, up 12.7%.
As natural rubber prices soared, they eventually surpassed those of synthetic rubber, reversing the previous abnormal price inversion between the two categories. Prices in Hainan and Yunnan, the two major producing areas, showed a slight upward trend, with Hainan’s dry rubber price rising 0.03% and Yunnan’s increasing by 1.3% from the beginning of the year. Compared to the same period last year, prices in both regions increased by over 23% and 25%, respectively.
Driven by rising spot prices, the Shanghai Futures Exchange rubber prices continued to climb. By the end of September, the average settlement price of the three-month contract reached 17,390 yuan, up 7.6% from the previous month and 45% from the start of the year. The upward trend remained strong, indicating sustained investor confidence in the market.
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