Report Industry Investment Rating - Not provided in the given content Core Viewpoints - As of February, multiple supply data points in the natural rubber industry showed inflection points, supporting the strengthening of natural rubber's valuation relative to the overall commodity level [5][55] - The consumption of the rubber sector highly overlaps with macro - consumption. The current global automotive industry maintains a high growth rate, which can support high - speed commodity demand [5][55] - Compared with strong commodities such as non - ferrous metals and precious metals, rubber's valuation is at a historical low. If the seven - year cycle of rubber valuation remains valid, 2026 will likely be a turning year from narrowing declines to expanding increases [5][55] - If the overall commodity market does not decline, the rubber sector is highly likely to strengthen [6][56] Summaries by Sections I. Supply 1. Natural Rubber Production - In December 2025, the total natural rubber production of ANRPC member countries decreased for two consecutive months to 10.93 million tons, a year - on - year decrease of - 10.5%. The reduction rate hit a 22 - month low and accelerated for three consecutive months. The RU valuation was significantly lower relative to the reduction rate [14] - The supply cycle of natural rubber has arrived. Except for Cote d'Ivoire and Cambodia, the year - on - year growth rates of the 7 - year cumulative/average production of the top ten rubber - producing countries turned negative from positive between 2019 and 2024 [15] - In 2026, the global natural rubber production is expected to increase by only + 0.6%, likely lower than the consumption growth rate for the first time [15] 2. Natural Rubber Inventory - For both RU warehouse receipts (light - colored rubber) and bonded area inventory (dark - colored rubber), rubber valuations are significantly low. The upward inflection point for light - colored rubber inventory appeared in May 2024, and for dark - colored rubber inventory, it appeared in October 2025 [23] - In November 2025, after centralized cancellations, the total inventory of the RU contract fell below 100,000 tons, a 154 - month low. In February, the total RU inventory was 124,600 tons, with a year - on - year de - stocking of 72,900 tons, entering an accelerated de - stocking process [24] - In February, the inventory inside the Qingdao Bonded Area was 104,900 tons, and outside the area was 532,300 tons, totaling 637,200 tons. It had been accumulating inventory for three consecutive months on a month - on - month basis, but the year - on - year growth rate had been narrowing for four consecutive months, indicating marginal de - stocking after excluding seasonal effects [24] 3. Other Supply - side Data - In February, the Thai latex (glue) was priced at 62.78 Thai baht/kg, the cup rubber at 55.52 Thai baht/kg, and the water - cup price difference was + 8.16 Thai baht/kg, strengthening marginally for three consecutive months. The upward inflection point was in December 2025 [31] - In December 2025, the domestic import volume of smoked sheet rubber was 45,800 tons, a year - on - year increase of + 70.8%. The growth rate had been narrowing for three consecutive months, indicating marginal reduction and the supply peak had passed. The upward inflection point was in January 2026 [31] - In December 2025, the El Niño index (EN) was - 0.55°C, a year - on - year cooling of - 0.13°C. In January, the Southern Oscillation Index (SO) was + 9.9 points, a year - on - year increase of + 6.2 points. The upward inflection point was in January 2026 [31] - In February, the weighted rainfall for Thai production was 0.64mm/day, a year - on - year decrease of - 1.95mm/day. The cumulative rainfall in the past 12 months decreased by - 0.28mm/day year - on - year, the first year - on - year decrease in 19 months, indicating a dry climate unfavorable for production. The upward inflection point was in February 2026 [31] 4. Synthetic Rubber Does Not Drag Down Natural Rubber - In January, the domestic butadiene production was 498,000 tons, and the butadiene rubber production was 150,000 tons, totaling 299,000 tons (30% conversion of BD), a year - on - year increase of + 12.0%, supporting butadiene rubber to continue to strengthen relative to whole milk rubber [39] - In February, the BR futures warehouse receipts reached a new high, making the domestic butadiene rubber inventory 58,900 tons, 0.472 times the total RU inventory. However, the large inventory difference does not negatively affect butadiene rubber. The inventory ratio between synthetic rubber and natural rubber has been fully reflected in the butadiene rubber/whole milk rubber price difference [39] II. Consumption and Macroeconomy 5. Automotive Industry - In February, the global automotive industry index slightly dropped to - 7.2 points. This data is positively correlated with both the commodity index and natural rubber. However, the correlation between the automotive industry and rubber is lower than that with commodities, and its leading effect on the commodity index is less than that on rubber. The global automotive industry can support the strengthening of commodities, and rubber is relatively undervalued [52] - In January, the domestic commercial vehicle production was 388,000 units, a year - on - year increase of + 26.1%, and the passenger vehicle production was 2.062 million units, a year - on - year decrease of - 4.2%. The overall domestic automotive industry is still in an increasing production channel, which can support the strengthening of commodities, consistent with the conclusion from the global automotive industry index [52]