Report Summary 1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints - The overall fundamentals of the rubber sector are weak. The sharp rise in the rubber sector on Thursday was likely due to macro - factors as its ranking in commodities did not significantly improve after the rise. The rumored reasons such as smoke sheet rubber storage and Southeast Asian rainstorms did not match the time and data, and the early implementation of EUDR is unlikely [3]. - From the perspective of synthetic rubber, the high - frequency data of the upstream and downstream are favorable. The BR - RU spread continued to strengthen this week, and there is a better safety margin for relatively long - BR in July [3]. - Analyzing the import, inventory, and downstream automobile tire consumption data of natural rubber, it is expected that the mixed basis still has room to weaken [3]. 3. Summary by Relevant Catalogs 3.1 Thailand Rainfall and Rubber - Thailand's daily - average weighted rainfall decreased month - on - month to 4.49mm/day. The average rainfall in the past 9 months increased by +1.91mm/day year - on - year, but the increase has been narrowing for 3 consecutive months. The decrease in rainfall did not lead to a monthly - level increase in rainfall [9]. - The spread between Thailand's smoked sheet rubber and standard rubber decreased month - on - month to +533 dollars/ton. The average premium in the past 12 months increased by +31.0% year - on - year, but the increase has been narrowing for 9 consecutive months [9]. 3.2 Thailand Glue and Cup Lumps - The spread between Thailand's cup lumps and glue strengthened month - on - month to - 6.70 Thai baht/kg. The average value in the past 12 months strengthened by +2.56 Thai baht/kg year - on - year, and it has been strengthening marginally for 8 consecutive months, which is bearish for RU unilateral [15]. 3.3 EUDR - EUDR is unlikely to be implemented ahead of schedule under the background of the decline of environmental protection in Europe. Policy adjustments, industry and economic resistance, and political and social factors have all led to the obstruction of environmental protection policies [18][19]. 3.4 Rubber Valuation - The position of rubber valuation in commodities has only slightly increased. After the sharp rise on Thursday, the ranking of the rubber sector in commodities did not change significantly [3][20]. 3.5 Rubber Production - In May, the output of the rubber alliance increased month - on - month to 767,000 tons, but decreased by - 3.2% year - on - year, with marginal production cuts for 4 consecutive months. In the long term, when the output of natural rubber is high, it is relatively weak compared to synthetic rubber, and vice versa. The current situation is bearish for the BR - RU spread and relatively bullish for RU [25]. 3.6 Crude Oil - As of July, Brent crude oil was at 68.3 dollars/barrel, a year - on - year decrease of - 20.5%. Crude oil is still in a weakening trend. The cycle of crude oil's influence on the strength of rubber unilateral is about 2 years, and about 1 year for synthetic rubber. The current stabilization of crude oil has little driving effect on the unilateral, and is more favorable for the long - BR and short - RU spread [28]. 3.7 Synthetic Rubber Supply - As of last Friday, the domestic butadiene capacity utilization rate decreased month - on - month to 68.9%. The average capacity utilization rate in the past 5 weeks increased by +4.4% year - on - year, with marginal production cuts for 2 consecutive weeks. The domestic high - cis butadiene rubber capacity utilization rate decreased month - on - month to 65.5%. The average capacity utilization rate in the past 5 weeks increased by +8.5% year - on - year, but the increase has been narrowing for 6 consecutive weeks. The domestic butadiene port inventory increased month - on - month to 23,600 tons, and the average inventory in the past 5 weeks increased by +4,700 tons year - on - year, with marginal destocking for 3 consecutive weeks. The total inventory of domestic butadiene rubber traders and factories was 32,800 tons, and the 5 - week average inventory increased by +10,000 tons year - on - year, with the increase narrowing for 2 consecutive months. The supply and balance of butadiene and butadiene rubber were tight this week [36]. 3.8 Tire Consumption - As of last Friday, the overall tire production and inventory balance data were satisfactory. The domestic all - steel tire production line operating rate increased month - on - month to 64.6%. The average operating rate in the past 12 weeks increased by +3.9% year - on - year, with marginal production increases for 7 consecutive weeks. The all - steel tire finished product inventory increased by 1 day month - on - month to 41 days, and the 24 - week average inventory decreased by - 1.6% year - on - year, with marginal destocking for 51 consecutive weeks. The domestic semi - steel tire production line operating rate increased month - on - month to 72.9%. The average operating rate in the past 24 weeks decreased by - 2.3% year - on - year, with marginal production increases for 5 consecutive weeks. The semi - steel tire product inventory remained flat month - on - month at 46 days, and the average inventory in the past 24 weeks increased by +36.5% year - on - year, with marginal destocking for 7 consecutive weeks [46]. 3.9 Automobile Production - In May, China's truck production decreased month - on - month to 292,000 vehicles; in March, Japan's truck production increased month - on - month to 96,000 vehicles; in April, South Korea's truck production remained flat at 17,000 vehicles. The combined output was 405,000 vehicles, a year - on - year increase of +3.0%, and the 12 - month cumulative value decreased by - 14.6% year - on - year, with the decline narrowing for 4 consecutive months. In May, China's passenger car production increased month - on - month to 2.133 million vehicles; in March, Japan's passenger car production decreased month - on - month to 618,000 vehicles; in April, South Korea's passenger car production increased month - on - month to 360,000 vehicles. The combined output was 3.291 million vehicles, a year - on - year increase of +8.5%, and the 12 - month cumulative output decreased by - 4.4% year - on - year, with the decline narrowing for 4 consecutive months, which is bullish for RU unilateral. The automobile industries of China, Japan, and South Korea have been recovering marginally for 4 consecutive months, but it is still early for them to become an obvious driving force for the unilateral [53]. 3.10 NR Month - Spread - As of July, the average daily open interest of the NR contract was equivalent to 1.1787 million tons, the warehouse receipt volume was 32,100 tons, and the virtual - to - real ratio was 36.06 times. Since the virtual - to - real ratio lags behind the month - spread, it is expected that the decline in the open interest of the NR contract will be greater than the destocking of warehouse receipts in the later period. From the long - term relationship, the NR month - spread may strengthen until September, and there is a large expectation of weakening after that (near - month weakening). Attention should be paid to the opportunity of reverse arbitrage when the month - spread weakens [58]. 3.11 Mixed Basis - In May, the total import volume of standard rubber and mixed rubber from Thailand, Malaysia, and Indonesia was 321,600 tons, with a consecutive 2 - month month - on - month decrease. The average import volume in the past 6 months increased by +10.1% year - on - year, with marginal increases for 10 consecutive months, which is bearish for mixed rubber. Analyzing various data, it is expected that the mixed basis still has room to weaken [62].