Analysis on downstream demand environment of natur

Analysis on the downstream demand environment of natural rubber in the second half of 2012

the demand environment of natural rubber is still difficult to be significantly improved, and its price will still maintain a weak oscillation and continue to seek the bottom in the third and fourth quarters

with the continuous decline of macroeconomic growth, China's manufacturing industry as a whole shows a weak trend. As a bulk industrial raw material, natural rubber has suffered a great impact in the process of this round of economic slowdown. Since 2011, the price of rubber futures in Shanghai has fallen by more than 50%. From 2012 to now, the weak growth of tire manufacturing and automobile industry in the downstream of natural rubber industry has become more and more serious, and the systematic risk of economic downturn has eroded to various specific industries in the industrial chain, resulting in the continuous decline of raw material commodity prices

about 70% of the consumption of natural rubber is used in tire manufacturing, and China is also a large tire production country. The author traces back to the terminal automobile industry of its industrial chain, and analyzes the production and marketing, investment, import and export status of the domestic tire automobile industrial chain, so as to interpret the extent to which natural rubber is affected by downstream industries

as a tire consumption terminal, the business environment of the automotive industry has been deteriorating since 2011. In 2009, due to the implementation of a series of policies to encourage consumption, such as "automobile to the countryside", China's automobile production surpassed that of the United States and became the world's largest automobile production country. After the end of China's preferential policies for automobile consumption in 2011, the growth of production and sales fell sharply. The automobile production in that year was 18million, an increase of only 1% over 2010. Since March 2012, China's auto production and sales have declined month by month again. According to the statistical data of the China Association of automobile manufacturers, China's automobile output in July this year was 1.437 million, a decrease of 23.6% from the highest value in March; Car sales in July were 1.34 million, down 24.9% from March. The total production and sales volume in January increased by 4.83% and 3.56% year-on-year respectively, with a relatively slow growth

with the sluggish growth of production and sales, China's automobile social inventory has increased rapidly. According to the data released by China Automobile Circulation Association, the inventory of domestic auto dealers continued to rise in June, and the comprehensive inventory coefficient reached 1.98. According to the practice of the auto market, it is normal for the inventory coefficient to be between 0.8 and 1.2. This situation has continued since January this year, and many dealers have had to withdraw from the market

in addition, the production and sales volume of the motorcycle industry related to the tire industry also continued to shrink. In July 2012, the production and sales volume decreased month on month and year-on-year, and the decline in month was higher than that in month. In July, the motorcycle industry completed the production and sales of 1.9157 million and 1.191 million vehicles, with a month on month decrease of 4.74% and 5.06% respectively, and a year-on-year decrease of 13.22% and 12.32% respectively, with a significant decline. Among them, the production and sales of two wheeled motorcycles were 1.7326 million and 1.7313 million, with a month on month decrease of 4.05% and a year-on-year decrease of 14.32% and 13.17%; The production and sales of three wheeled motorcycles were 183100 and 178700, with a month on month decrease of 10.88% and 13.87%, and a year-on-year decrease of 1.26% and 3.11%

in the month, the production and sales of motorcycles in the whole industry were 13.5421 million and 13.6456 million, with a year-on-year decrease of 11.72% and 11.08%, an increase of 0.31 and 0.26 percentage points over the month. Among them, the production and sales of two wheeled motorcycles were 12.2343 million and 12.3371 million, a year-on-year decrease of 12.53% and 11.92% respectively; The production and sales of three wheeled motorcycles were 1307800 and 1308500, with a year-on-year decrease of 3.36% and 2.29% respectively. The industry as a whole showed a downward trend

the weakness of the external economic environment not only affects the overall production and sales of China's automobiles, but also intensifies the internal competition in the industry and highlights the structural contradictions. Since the outbreak of the European debt crisis, European and American automobile enterprises have strengthened their exports and sales to China, and the domestic automobile industry has been deeply affected

in 2011, under the environment of the slowdown in the growth of China's automobile sales, the import volume of foreign brand automobiles increased significantly, with an increase of 21.7%. Since 2012, the growth rate of China's automobile import has been as high as 29%. The large increase of imported cars, especially high-end cars, has a certain impact on China's automobile industry

the decline in auto production and sales and the increasingly fierce external competition have led to a sharp decline in the performance of domestic auto enterprises. As of the end of July 2012, in the 2012 interim performance or performance forecast released by 14 domestic vehicle manufacturers, only FAW Xiali (000927, Guba) and Zhongtong bus (000957, Guba) achieved year-on-year growth, while the interim performance of 11 other vehicle enterprises fell to varying degrees, of which FAW sedan (000800, Guba) is expected to lose 75million yuan in the first half of the year

the performance of heavy vehicle enterprises in commercial vehicles is even more embarrassing. As a representative of commercial trucks, China National Heavy Duty Truck (000951, Guba) is expected to have a 50% - 100% decline in net profit in the first half of the year compared with the same period last year, while Dongfeng Motor (600006, Guba) is expected to have a 60% - 70% decline in medium-term performance

according to the semi annual report data of Valin Xingma (600375, Guba), which is mainly engaged in heavy trucks and special vehicles, the net profit in the first half of the year fell by 70% year-on-year. In terms of product sales, the sales revenue of heavy trucks and special vehicles of Valin Xingma decreased by 15.4% and 68.3% year-on-year respectively. The overall downturn in the external environment led to a downward trend in the performance of the whole industry

September and October are the peak consumption seasons of cars every year, but judging from the situation this year, many car companies are still on holiday in August, and are not optimistic about future sales. On the whole, the development of the automotive industry has encountered great difficulties. In some applications, the maturity of a certain polymer should be increased. It is best to cover it with cloth when not in use. This is the fundamental reason for the insufficient consumption of natural rubber tires

the tire industry is underemployed and the expectation is pessimistic

the slowdown in the growth of the domestic automobile industry has greatly affected the development of the tire industry. Due to the sharp fall in the prices of natural rubber and synthetic rubber, the current benefits of tire enterprises are acceptable, but their future expectations are relatively pessimistic

from the perspective of fixed asset investment in the tire industry, the level of each month in 2012 is generally lower than that in 2011, indicating that enterprises have poor expectations for the future market. As of May this year, the planned fixed asset investment in China's tire industry totaled 97.9 billion yuan, down 11.5% from 110.6 billion yuan in the same period last year

since March, major domestic tire enterprises have rapidly reduced the operating rate to cope with the sluggish demand for tires from downstream automobile enterprises. By July, the operating rate of major tire enterprises was less than 60%, while some small and medium-sized tire enterprises often shut down

due to the huge production capacity of tire enterprises at present, from the data point of view, tire production still maintains a growth trend. In July, the production of rubber tire casings in China was 78.97 million, and the production of radial tires was 37.175 million, an increase of 5.5% and 12.5% respectively. From the output growth of both, it is not difficult to find that the output growth of the tire industry showed a relatively obvious downward trend, in which the output of tire casing increased by only 1% in April. The monthly average growth rate of tire casings in this month was only 7.18%, far lower than the monthly average growth rate of 15.3% in the previous three years

the shrinking demand for tires in the downstream automotive industry and a large number of tire production have led to a high level of tire inventory in China. At present, the total inventory is more than 15billion, and the backlog of products of major manufacturers is serious

at present, 46% of China's tires are exported, and the export status of tires has a great impact on the consumption of natural rubber raw materials. In the first five months of 2012, exports maintained a growth momentum. According to the customs data, China's tire exports reached 166 million in June, an increase of 8.5% year-on-year. Among them, exports to the United States, Russia and the Middle East are relatively smooth, and the export volume increases rapidly. Exports to Europe and Japan continued to show a downward trend, with exports to the European Union accounting for 17% of total exports, while the highest proportion was more than 20%

specifically, according to the statistics of 42 member enterprises exporting tires by the tire unification branch of China Rubber Industry Association, the delivery volume (pieces) of exported tires in the first half of the year increased by 3.3% year-on-year, with 22 enterprises increasing their exports and 20 enterprises decreasing; The export delivery volume (pieces) of radial tires increased by 2%. Among the 36 tire enterprises exporting radial tires, the export of 22 increased, and the export of the remaining 14 decreased. Both large-scale enterprises and foreign-funded enterprises have encountered some resistance to the export of tires this year, while small and medium-sized tire enterprises have increased their price reduction efforts due to financial constraints and operating difficulties, and the export volume has increased. But this kind of export relying solely on low prices is difficult to last. On the whole, China's tire export this year is less than that of last year

transportation volume, especially highway transportation volume, is an important indicator of tire consumption. According to the data of the National Bureau of statistics, in 2012, China's road passenger traffic volume was 17.47 billion, an increase of 8.7% year-on-year, higher than the same period last year. The road freight volume was 14.982 billion tons, with a year-on-year increase of 14%, maintaining a rapid growth rate. This is one of the few tire consumption indicators with good performance at present. The third quarter will enter the peak season of the transportation industry, which may generate a large demand for tire replacement, which will boost tire consumption to a certain extent, but the huge tire inventory may reduce the boost effect

to sum up, the overall industrial chain of natural rubber tire automobile has been negatively accelerated by the weakening of macro-economy, and is affected by the lack of competitiveness and production capacity withdrawal, resulting in poor performance. It is difficult for the terminal automobile industry to recover significantly in the third quarter, and the production and sales volume may maintain a weak growth trend. At present, the overall profitability of the tire industry is OK, but due to the low concentration of enterprises and the increasingly fierce competition in the industry, the products may face substantial price cuts in the second half of the year, and the profit margin will be affected. Some small and medium-sized enterprises may be eliminated, which will further increase the unstable factors of natural rubber prices. The demand environment for natural rubber is still difficult to be significantly improved, and its price will remain weak in the third and fourth quarters and continue to seek the bottom

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