impact of coronavirus on rubber chemical industry (Feb 2020)

Since the Chinese outbreak of coronavirus , the rubber chemical market is still relatively deserted. The resumption of the production of rubber chemical companies is delayed. The downstream terminal factories have started to working slowly. The logistics channels in various regions are still limited, and the market is under heavy resistance.

Supply side: After February 10th, the recovery rate of rubber chemicals was low. the start of rubber accelerator companies in the main production areas continued to be postponed. Some companies were scheduled to resume production on February 10th, and production preparations most companies resumed production are completed, but due to strict government control and the time for resumption of production has continued to be postponed. At present, the recovery of production enterprises is mainly large enterprises, and most of SMEs have not yet resumed production. Some companies have a certain amount of inventory before the holiday, and they begin to receive orders one after another during the week. The product price temporarily implements the pre-holiday price. However, due to the increase in logistics costs, limited shipments, and inadequate downstream receiving, the supply side has not experienced tight supply.Inventory of plant operating enterprises is high during the Spring Festival.

Demand side: During the week, some tire companies resumed work, but the overall level of start-up is still low. the operating rate of semi-steel tire manufacturers during the week was 12.1%, an increase of 1.92% from last week, and a decrease of 21.53% year-on-year; the operating rate of all-steel tire manufacturers was 15.4%, an increase of 3.34% from last week. A year-on-year decrease of 18.1%. Due to the long shutdown period during the Spring Festival, in the early stage of resumption, the terminal mainly digested the raw material inventory, and the current logistics and transportation still have major problems. The terminal has no obvious procurement intention for the time being.

The recovery of the rubber chemical market will take time. First of all, the start-up of the demand side is slowly increasing, and limited enthusiasm for raw material demand is limited in the short term. Secondly, mainstream rubber chemical companies will resume production one after another, and supply will increase steadily. Some companies will be under pressure to reduce their prices to stimulate shipments. Third, logistics costs will increase. Downstream procurement is prudent. On the whole, the news surface is bearish, and the short-term rubber chemical market is expected to be weak.