Vietnam’s Rubber Export Promises a Year of Rapid Growth

If 2010 is forecasted to be a difficult year for Vietnam’s coffee (output and export turnover drop), optimism is finding its way to rubber industry. Figures summed up by the GSO in the first four months show that rubber export is in a good time…

Reach high price

The world’s rubber market is warming up with the price keeping reaching new peaks. Rubber becomes one of the commodities with biggest increase in its price in recent time. According to the Ministry of Rural and Agricultural Development, the price of Vietnam’s natural rubber for export has increased dramatically since June. If in January 2010, the unit price is US$2,516 per ton, it reaches US$2,826 per ton in April 2010. This price level exceeds the peak of July 2008. As such, the average price for rubber exported in the first four months reaches US$2,640 per ton, an increase of 92.6 percent against the same period last year. Rubber export of the whole nation in the first four months reaches 173,000 tonnes, with a turnover of US$ 445 million, an increase of 23.8 percent in terms of quantity and 129.7 percent in terms of value compared to the corresponding period of 2009.

The reason for rubber price keeps going up mainly lies in the scarcity of supply source. Last year, the weather in many material areas in many countries was not favourable, making the output fall sharply. Meanwhile, demand for natural rubber rises rapidly, making supply unable to meet demand. In addition, demand for rubber consumption in domestic market is also on a gradual upward trend. According to Vietnam Rubber Association (VRA), since 2010, domestic consumption has been stimulated by the presence of Kumho Tires Factory (Korea) in Binh Duong province (designed capacity of three million tires for light trucks per annum). Furthermore, other processing factories use some 80,000 tonnes of natural rubber. It is broadcasted that rubber price will keep increasing until June 2010, the period during which supply of three world’s largest rubber producers including China, Malaysia and India is scarce and demand for tires of automobile manufacturers rises significantly. Regional economic experts also foresee that demand for production of automobile tires and tubes of China far exceeds that of the USA and Western Europe.

Mr. Abdul Rasip Latiff, Managing Director of International Rubber Consortium Ltd., broadcasts that the average price of Thailand’s rubber and Malaysia will range about US$3.2 and 3.3 per kilo in quarter II this year and the average price for this year, US$3.19 per kilo.

VRA anticipates that this year, Vietnam’s rubber export will reach 780,000 tonnes with a turnover of US$1.7-1.8 billion. Market conditions of the global rubber market in early 2010 and the trend of the whole year point out that rubber export of Vietnam is in a favourable time.

Expand export market

According to statistics, in the first four months of 2010, export turnover of rubber products reaches US$78.03 million, going up by 98.3 percent against the same period of 2009. Meanwhile, import of rubber products also witnesses an increase of 28.5 percent, reaching US$87.32 million. Thanks to this, the trade gap is US$9.29 million only while that of the previous year is US$28.62 million. Almost all export markets for Vietnam’s rubber witness a dramatic growth in quarter I 2010 against the same period last year. Thailand, Indonesia and Hong Kong reach US$1.3 million, US$1.3 million and US$989,000, respectively. Japan, the leading market in Vietnam’s rubber export turnover, reaches US$11 million, China, US$9 million and the US, US$7 million, etc. It is noteworthy that beside loyal markets, Vietnam has attracted more new markets, including Indonesia, Russia and Czech, with export volume in February being 415 tonnes, 735 tonnes and 38 tonnes, respectively. Most recently, Polland has also become an export market for Vietnam’s rubber.

Tire is the major commodity amongst rubber products for export. The export turnover of tires in the first four months reaches US$64.6 million, making up about 82.9 percent of total rubber export turnover.

In the first four months of 2010, Vietnam gets tires exported to 102 markets, of which the USA tops the list (25.7 percent), followed by Malaysia, Egypt, Brasil and Cambodia.

Allocate more planting area

During the past two years, the agricultural sector has made a plan to plant a further area of 40 hectares of rubber, bringing the total area of rubber to 715,000 hectares in 2010 in order to increase the output to 770,000 tonnes. The Government is known to have promulgated Decision 750/TTg on planning rubber development until 2015 with vision up to 2020. Accordingly, the whole nation will have 800,000 hectares of rubber by 2015 and the latex output, 1.2 million tones. The export turnover is estimated to be US$2 billion in 2010.

According to Vietnam Rubber Group (VRG), the Government has a policy to develop rubber planting in the Central Highlands, especially in Gia Lai. VRG already studies conditions in North Western area and is having rubber trees planted on a terrain which is 700m above sea level (Vietnam’s rubber trees are mainly planted on a terrain which is below 700m above sea level).

Tags: Vietnam Rubber, Vietnam rubber exports