[Macro Background] Data released by the National Bureau of Statistics shows that China's manufacturing purchasing managers index (PMI) in July 2023 was 49.3%, an increase of 0.3 percentage points from the previous month, and it has been rising steadily for two consecutive months. Judging from the current macro situation, positive expectations in the second half of the year are heating up, laying the foundation for the improvement of the natural rubber market. In July, China's natural rubber spot market overall showed a relatively stable state, with small fluctuations during the month, and slight price adjustment at the beginning and end of the month. Macroeconomic policies have warmed up, boosting commodity markets, but fundamentals still show slight weakness, and rubber prices have repeatedly fluctuated within ranges.

Supply side: Currently, the overall cutting rate in Thailand's production areas is about 85%, but due to phenology and labor costs, the overall raw material supply falls short of expectations. Due to the current weak demand and insufficient rubber tapping profits, rubber farmers are not enthusiastic about rubber tapping. The production profits of the processing plants are upside down and the enthusiasm for production is weak. They mainly maintain long-term contract orders, and start operations are in line with maintaining a medium level.

Weather disturbances in Hainan's production areas have weakened, and rubber tapping work has been carried out one after another. The glue in the production areas has maintained a gradual increase in quantity. However, downstream demand has only remained in need of replenishment. The overall demand is relatively limited. The glue price has basically remained relatively stable, with limited fluctuations.

Judging from the seasonal output trend of this rubber, China's major foreign producing areas were in a seasonal increase in volume in August, and the output of raw materials began to increase. There are also certain drag expectations on raw material prices, and the cost side supports the decline.

Demand side: Chinese semi-steel tire companies remained active in foreign trade orders during July, and domestic snow tire orders were intensified. In addition, the shortage of some domestic product specifications still existed. The enthusiasm of companies to schedule production remained unchanged, and the overall operating rate remained high. status. In July, the capacity utilization rate of most all-steel tire enterprises was stable. Coupled with sufficient foreign trade orders, the overall start-up performance of the enterprises was acceptable. Due to the increase in inventory, individual enterprises have moderately reduced their burdens, which has caused a certain drag on the increase in overall operating rates.

In August, the operating rate of semi-steel tires is expected to increase slightly, while the operating rate of all-steel tires may decrease slightly. At present, semi-steel tire companies have sufficient foreign trade orders, and some domestic specifications are out of stock. Companies are not enthusiastic about scheduling production, and the operating rate is expected to remain at a high level. At present, orders from some companies for all-steel tires are falling. In order to control the growth rate of inventory, companies arrange maintenance at the beginning of the month. In addition, some companies still have maintenance plans at the end of the month as their inventories increase, which will drag on the operating rate in August.

Prediction: In early August, amid the positive macro atmosphere, optimism in the Tianjiao market heats up, and the possibility of a capital game in the month approaching the delivery increases, and there may be room for a slight increase in rubber prices. Returning to fundamentals in the middle and late months of the month, the seasonal increase in supply and demand performance was flat, and social inventories were still suppressed, relatively compressing the room for growth in Tianjiao. It is expected that most of Tianjiao will maintain a wide-ranging volatility trend in August, but the overall situation may improve compared with July.