In order to better prevent the epidemic and control the entry of foreign people, many countries have chosen to close all foreign transportation lines, including highways, railways and airlines. Malaysia is one of them. On March 16, 2020, Malaysia announced the closure of the city. Since March 18, 2020, it has taken two weeks of strict restrictions nationwide to strengthen the prevention and control of public health events. On March 18, 2020, Penang Port of Malaysia announced that it would no longer accept the transit of Thai goods. As a big producer of natural rubber, Malaysia’s “closure” means that natural rubber cannot be exported on time. As an important raw material of tires – rubber, how will this affect the tire market in China?

1. Malaysia’s position in the global natural rubber Market

In the past five years, the annual output of natural rubber in Malaysia has shown a downward trend as a whole, reaching a climax in 2015 and occupying 5.89% of the global natural rubber. Then, the global output share has gradually declined. In 2018, the decline is relatively serious. In 2019, the output is about 650000 tons, accounting for 4.55% of the global natural rubber output. In 2019, Malaysia ranks the 7th in the world’s major producing countries. The implementation of “closure” in Malaysia will have an impact on the world The market of natural rubber has great influence and impact.

2. Impact of Malaysia’s “closure” on China’s rubber Market

China’s imports from Malaysia fell for two consecutive years after peaking in 2017. In 2019, China’s imports from Malaysia reached 699000 tons, accounting for 13.28% of China’s total natural rubber imports.

The average monthly import volume of China from Malaysia in 2017-2019 is about 65000 tons, and the temporary “closure” of Malaysia for two weeks may directly reduce the import volume of China from Malaysia by about 35000-35000 tons. As can be seen from the figure, except for the relatively small amount of imports in February, other months are relatively balanced.

3. What is the impact of Malaysia’s “closure” on the tire market

Malaysia is a big country in the production of natural rubber. The annual output of China’s imported natural rubber from Malaysia is not small. Although the date of unsealing has not been determined, but at present, the first two months are affected by the epidemic situation. Although the enterprise delays the start-up and the production is greatly reduced, the domestic demand is also reduced. The reduction in the import of raw materials has not yet led to the production of domestic tires Influence. At present, China’s domestic natural rubber non-state storage inventory is up to about 1.53 million tons, which can meet the domestic normal production for more than three months. However, if the time for countries to unseal is too long and domestic demand grows gradually, it may have some impact.

70% of natural rubber in China is used to make new tyres every year. China’s tire consumption accounts for one third of the global tire consumption, while China’s tire production exceeds half of the global tire production. Therefore, China is the world’s largest consumer of natural rubber. China’s natural rubber consumption increased from 2.69 million tons in 2007 to 4.8 million tons in 2014.

The postponement of downstream plant construction and the limitation of logistics and transportation will affect the consumption of natural rubber, thus forming a direct negative impact on the market. In January and February, the downstream production is restricted, which will reduce the consumption of rubber raw materials. Secondly, strict traffic control, reduced personnel flow, multiple high-speed road closures, and logistics restrictions will also reduce the tire consumption, the largest downstream product of natural rubber, which will pose a negative drag on the demand market of Tianjiao. As the largest importer of natural rubber, in order to avoid the Spring Festival holiday, the original import sources are mostly concentrated in February to March. With the extension of the holiday, the arrival time of cargo may be more compact. But fortunately, the epidemic situation in China has been well controlled and the market is slowly recovering.