arcticgrayling| Rubber tree cutting rate in Xishuangbanna, Yunnan is 60%: processing plants face the challenge of insufficient raw materials and overcapacity

News summary

Yunnan Xishuangbanna rubber producing area has a cutting rate of 60% due to the impact of drought, raw material output is lower than in previous years, factories are under-staffed and raw material purchases have decreased by about 30%. The problem of overcapacity has become prominent. The EU's EUDR policy may lead to an increase in raw material costs, putting tire factories under pressure to export to the European market.

Newsletter text

[Rubber trees in Xishuangbanna are growing well, drought affects output]

The growth of rubber trees in Xishuangbanna, Yunnan Province is relatively healthy, with only some plants experiencing powdery mildew. This is caused by insufficient maintenance by rubber farmers and has limited impact on output. At present, due to low rainfall, the cutting rate of rubber trees in Xishuangbanna production area is about 60%. Rubber farmers have a strong willingness to tap rubber. However, glue production has been affected by drought, and the daily income of rubber farmers has reached about 150 yuan, and they have expectations for future output.

[The output of raw materials is limited, and the diversion situation increases compared with the same period last year]

Affected by the arid climate, the output of raw materials in Xishuangbanna production area was lower than in previous years, but it did not decline compared with the same period last year. Due to the strong demand from concentrated milk processing plants, their profits are better, and the diversion of raw materials has increased, which may lead to less total emulsion production in the short term.

[The start-up of processing plants has been affected, and raw material prices are supported]

Due to the limited output of glue, the production capacity of the processing plant has not been fully released, and waterline production has been affected, while trunk production remains normal due to the existence of raw materials stored in the factory during the winter. The purchase volume of raw materials dropped by about 30% year-on-year. Full latex production was greatly affected, while dry rubber production did not decrease. The increase in raw material prices has led to a relatively tight supply of raw materials, and it is common for factories to rush to buy raw materials.

[The problem of overcapacity is prominent, and the price of raw material processing is at a minimum]

Xishuangbanna's processing plants face the problem of overcapacity, and the problem of unsaturated raw material processing has long existed. The supply of raw materials in the region is insufficient and needs to be imported from neighboring countries. However, in recent years, the rise of neighboring processing plants has led to a decrease in imports. This makes it difficult to significantly reduce domestic raw material costs, providing pricesarcticgraylingSome support. Processing plants had to lower prices in order to expand sales channels, which put pressure on profits.

[EU EUDR policy may have an impact on tire factories]

The EU's EUDR policy has had a certain impact on processing plants. Currently, EUDR certification is being promoted to plantations through enterprises, and the results of negotiations between China and the European Union will be announced in May. Thailand's advancement in EUDR certification may increase raw material costs by US$200 to US$300/ton. If domestic tire manufacturers fail to meet the EUDR certification requirements, they may face the risk of losing the European market or increasing costs. Upstream processing plants may also face the risk of reduced demand. At present, the processing factory lacks effective response measures and can only wait for relevant policies to be clarified.