Introduction
Widening spread between Chinese warehouse and overseas TSR prices has ruled out the arbitrage of international rubber into China. While the February imports figures have been strong, there is a widespread reluctance among Chinese buyers to book international cargoes, given the rising inventory level.
Even for TSR 20 Mixture CIF prices, as prices already factor in freight into China, there is not much price parity. Despite stronger Chinese trade data for February, a healthy inventory level continued to dampen Chinese demand for imported rubber.
Stronger trade data not an indicator of increased demand
The import surge was largely triggered by the significant drop in the physical prices in Q4 2022 and January 2023 and the clearing of the backlog of orders. This was further clarified by the surge in the indicative export figures for March.
Meanwhile, a slower-than-expected rebound in the advanced economies and re-imposition of anti-dumping duty on certain Chinese tires in Europe is likely to impact both imports and exports in the coming months