Futures Daily News (Reporter Han Yufu) On May 26, the 18th Shanghai Derivatives Market Forum hosted by the Shanghai Futures Exchange opened in Shanghai Futures Building. At the round table of the Shangyan Rubber (11365, -50.00, -0.44%) Forum held in the afternoon of the same day, the guests had an in-depth discussion on some of the current problems facing the international rubber market.

Although this year, with both domestic and foreign markets supply and demand strong, the market generally believes that the center of gravity of rubber prices is likely to remain high during the year. However, in the long run, there are certain problems in the supply of natural rubber at home and abroad, which require further attention.

According to Salvatore Pinizzotto, Secretary-General of the International Rubber Research Organization (IRSG), the main production areas of natural rubber are currently concentrated in Southeast Asia, and the natural rubber production in Thailand and Indonesia accounts for 56% of the total global natural rubber production. However, Li Hong, general manager of Shanghai Shidong Trading, told reporters that in the past two years, due to the impact of the new crown epidemic, Thailand's economy has continued to decline, and banks' lending to the rubber industry has been significantly reduced. In addition, with the recent outbreak of the new crown epidemic in Thailand, and the Thai government has also found the Indian variant strain in the infected population, some areas have implemented a strict regional closure policy. These will have a certain impact on the output of natural rubber in the past two years.

In addition, Li Hong believes that relevant companies need to pay more attention to the legalization policy of marijuana cultivation previously promulgated by Thailand. "Although this policy will not affect the local natural rubber output in the short term, considering that hemp cultivation will make more profitable, it will definitely affect the local rubber cultivation in the long run."

In fact, in the past two years, due to the low return rate of rubber planting, Thailand's rubber production has declined. Li Hong added that compared with 5.14 million tons in 2018, the output of natural rubber in Thailand in 2020 is only 4.5 million tons. The side proved the low rate of return on investment in the rubber industry and the reluctance of new funds to participate in planting or processing.

According to Wang Pei, chairman and general manager of Qingdao Quanmei Rubber Tire, this is the situation throughout Southeast Asia. Especially in the past two years, due to trade frictions, a large number of basic production companies have moved to Southeast Asia, which has driven land prices and workers’ wages in Southeast Asia.

Under such circumstances, even though the relevant companies have raised the wages of rubber tapping and planting personnel in the past two years, the enthusiasm of workers is not high. According to Salvatore Pinizzotto, not only the new investment in the plantation continues to shrink, but there are also fewer young people and women participating in the rubber planting industry.

Although the output of Africa and Latin America has continued to grow in the past two years, Wang Pei believes that the growth of the new production areas cannot offset the decline in production in the main production areas, and will eventually affect the supply and demand of the future market.

As for China, it seems to be facing the same situation. Li Qisheng, President of Hainan Natural Rubber Industry Group, introduced the current situation of the Hainan rubber market, said that Hainan cannot currently find a large-scale seedling company, and private enterprises have not been able to grow new rubber in the past two years.