Salient to Investors:
Rubber shortages to turn into a flood as China, the biggest consumer, grows at the slowest pace in three years.
This quarter’s 22 percent decline is the worst since the global financial crisis in 2008 and exceeds a 16 percent retreat in commodities. China accounts for 33 percent of global demand and tires represent 70 percent of natural rubber consumption there.
Chris Pardey of RCMA Commodities Asia Group is bearish, sees the surplus reaching 402,000 metric tons in Half2 as production rises and demand falls, and versus 134,000-ton deficit in Half1.
Median forecast in Bloomberg poll predicts a further 21 percent drop by the end of the year. Analysts following tire makers are increasingly bullish.
Lou Zhi at Hunter Capital Ltd. says a structural bear market is in place for industrial commodities, says no other country can make up a decline in Chinese consumption.