Guosen: The long-term trend of the natural rubber industry is clear, and the production area opportunities provide cost support for the upside space.

Guosen released a research report stating that natural rubber has triple attributes in agriculture, industry, and energy, which fundamentally determine the complexity of the natural rubber market. According to neutral expectations (based on the average yield of the past five years), the compound growth rate of global natural rubber production from 2023 to 2028 is expected to be less than 1%, with supply gradually peaking, stable demand growth, and the supply-demand gap expected to widen year by year in the future. From a fundamental perspective, the long-term trend of the natural rubber industry is clear, with production area cost opportunities supporting upward space, and it is predicted that the price peak of this rubber cycle will be higher than the previous cycle. Key points from Guosen are as follows: Overview of varieties: Natural rubber has triple attributes in agriculture, industry, and energy Natural rubber has triple attributes in agriculture, industry, and energy, which fundamentally determine the complexity of the natural rubber market. The rubber market cycle is usually based on capacity adjustment lag, driven by economic prosperity, with industrial attributes dominating; or supported by the rising energy prices, with energy attributes dominating; the short cycle is usually driven by extreme droughts or floods in the main producing areas, with agricultural attributes dominating. As rubber is a woody crop, its cycle is relatively long, with a large cycle appearing every 20-30 years. Supply and demand analysis: Supply gradually peaking, stable demand growth, and the supply-demand gap expected to widen year by year With the traditional production areas reducing capacity and the trend of decreasing increments in emerging production areas, according to neutral expectations (based on the average yield of the past five years), the compound growth rate of global natural rubber production from 2023 to 2028 is expected to be less than 1%. With demand stabilizing and growing in China and rapidly growing in emerging countries, it is expected to continue to grow. Based on the compound growth rate of natural rubber consumption over the past five years, it is expected that the global natural rubber supply-demand gap will continue to expand, thereby pushing the price center upward year by year. Market outlook: Long-term trend is clear, production area cost opportunities support upward space From a fundamental perspective, the intensity of the short-term supply-demand contradictions may be difficult to match the previous rising cycle (2009-2011), but the long-term trend of reduced supply and stable demand growth is clear, and the natural rubber price center is expected to rise year by year as the supply-demand gap continues to widen. In the background of the upward trend, if similar to the macroeconomic conditions of significant global economic stimulus around 2009, natural rubber is likely to derive new driving logic in the rising process. In terms of valuation, considering inflation factors since 2010 and the cost support of alternative industries, it is expected that the price peak of this rubber cycle will be higher than the previous cycle. Risk factors: Risk of dramatic weather changes in production areas; risk of macroeconomic fluctuations; risk of inaccurate supply calculation data.