Recovery of rubber prices opens up positive prospects for the domestic "white gold" industry

Rubber prices expected to continue to rise

The latest issue of the Agricultural-Forestry-Fisheries Market Bulletin of the Import-Export Department (Ministry of Industry and Trade) said that since the beginning of March 2024, rubber prices on Asian exchanges have tended to increase in the context of high oil prices and concerns about weather in Thailand, causing limited supply.

Rubber prices are expected to continue rising in the coming months due to growing concerns about supply as Southeast Asia enters its low harvest season, which runs from February to April 2024.

Specifically, at the Osaka Commodity Exchange (OSE), rubber prices increased sharply compared to the end of last month. On March 11, 2024, the price of RSS3 rubber for near-term delivery was 326.5 yen/kg (equivalent to 2.22 USD/kg), up 9.7% compared to the end of February 2024 and up 60.9% compared to the same period in 2023.

Triển vọng khả quan cho ngành cao su Việt Nam

Rubber prices are expected to continue rising in the coming months due to growing concerns about supply. Illustrative photo

On the Shanghai Futures Exchange (SHFE), RSS3 rubber prices are on an upward trend. On March 11, 2024, the RSS3 rubber futures price for near-term delivery was 14,150 yuan/ton (equivalent to 1.97 USD/kg), up 2.6% from the end of February 2024 and up 19.5% from the same period in 2023. In terms of inventory, in the week ending March 8, 2024, the natural rubber inventory at the Shanghai Futures Exchange reached 215,333 tons, up 899 tons; the amount of imported goods reached 210,080 tons, up 220 tons compared to the previous period. The natural rubber inventory at warehouse No. 20 reached 118,339 tons, up 3,427 tons; The amount of imported goods reached 111,384 tons, an increase of 605 tons compared to the previous period.

Meanwhile, the natural rubber inventory in Qingdao Free Trade Zone reached 129,500 tons, down 0.5 thousand tons from the previous period. The natural rubber inventory in Qingdao General Trading Warehouse reached 428,100 tons, down 2,100 tons from the previous period.

In Thailand, rubber prices continue to rise sharply. At the close of trading on March 11, 2024, RSS3 rubber prices fluctuated at 86 baht/kg (equivalent to 2.43 USD/kg), up 7.4% compared to the end of February 2024 and up 59.9% compared to the same period in 2023. The Thai Meteorological Department has warned of adverse weather that could damage crops.

Positive outlook for domestic rubber industry

In 2024, Ba Ria Rubber Joint Stock Company strives to reach 9,250 tons of exploitation output; 14,050 tons of processing; 10,450 tons of consumption (including purchasing); of which 3,000 tons are exported. In 2023, the company will exploit more than 9,829 tons of rubber latex, reaching 102.93% of the annual plan, with an average yield of 1.55 tons/ha. The output of consumed rubber latex will reach more than 11,403 thousand tons, reaching 108.1% of the plan; of which more than 3,980 tons will be exported, reaching 132.4%.

Meanwhile, Loc Ninh Rubber Company Limited set a target of 12,850 tons of dry rubber output in 2024, purchasing 3,500 tons, and selling 17,000 tons. In 2023, the Company exploited 12,825 tons of latex, exceeding the assigned output plan by 9.1%. The productivity of the garden reached 1.68 tons/ha, with 2/7 farms reaching 2 tons/ha.

Vietnam's rubber export prices have also increased, opening up positive prospects for the Vietnamese rubber industry. Illustrative photo

Regarding rubber export situation, citing statistics from the General Department of Vietnam Customs, the Import-Export Department said that in February 2024, rubber export reached 87.75 thousand tons, worth 129.94 million USD, down 58.3% in volume and 56.2% in value compared to January 2024; Compared to February 2023, it decreased by 33% in volume and 29.7% in value.

The reason for the decrease in export output is that in February 2024, there was a Lunar New Year holiday in both Vietnam and China, so Vietnam's rubber export activities were affected. In the first two months of 2024, rubber exports reached 298.24 thousand tons, worth 426.92 million USD, up 12.1% in volume and 16.1% in value compared to the same period in 2023.

Regarding export prices, in February 2024, the average export rubber price reached 1,481 USD/ton, up 5% compared to January 2024 and up 4.9% compared to February 2023.

According to data from the Import-Export Department, in February 2024, China was still Vietnam's largest rubber export market, accounting for 66.89% of the country's total rubber exports, with nearly 58.7 thousand tons, worth 84.12 million USD, down 65% in volume and 63.9% in value compared to January 2024; Compared to February 2023, it decreased by 40.5% in volume and 37.8% in value. While many export industries are worried about the Red Sea tensions and rising freight rates, the rubber industry will be less affected by this issue, as the main export market is China.

The average export price of rubber to China was at 1,433 USD/ton, up 3.2% compared to January 2024 and up 4.4% compared to February 2023.

In the first two months of 2024, Vietnam exported about 226,51 thousand tons of rubber to China, worth 317.09 million USD, up 10.1% in volume and 14.4% in value over the same period in 2023. In February 2024, the amount of rubber exported to some markets decreased compared to February 2023 such as: China, India, Taiwan, Indonesia, Turkey, Japan... On the contrary, exports to some markets such as: Korea, the United States, Germany, Russia, Italy, Brazil, Spain, Türkiye still grew well in both volume and value compared to February 2023.

Natural rubber prices are currently at a seven-year high due to growing demand from China’s electric vehicle industry, coupled with poor production in Thailand and Indonesia. Vietnam’s rubber export prices are also rising, opening up a positive outlook for the Vietnamese rubber industry.

According to experts, there are a series of factors that simultaneously affect the increase in rubber prices, including the booming auto sales in China. According to the China Association of Automobile Manufacturers (CAAM), in the first half of 2023, new car sales mainly fluctuated at a low of 2 million units per month. By November 2023, sales had increased 27.4% compared to a year earlier to 2.97 million units, then to 3.15 million in December 2023, an increase of 23.5%. CAAM expects the country's auto sales to increase to around 31 million units in 2024.

Rising auto sales are driving up demand for natural rubber. According to Michelin, China’s demand for new vehicle tires rose 30% year-on-year in December 2023. Analysts and rubber traders expect prices for the tire-making raw material to remain stable at high levels for the foreseeable future.

For the European Union (EU), in 2023, Vietnam is the 12th largest non-EU rubber supplier with 67.82 thousand tons, worth 94.35 million Euros (equivalent to 102.86 million USD), down 17.4% in volume and 39.6% in value compared to 2022. The market share of Vietnamese rubber in the total rubber imports of the EU from non-EU markets accounts for 3.23%, higher than the 3.02% level in 2022.

Also according to statistics from the European Statistical Office, in 2023, the EU imported over 2.1 million tons of rubber (HS 4001, 4002, 4003, 4005) from markets outside the bloc, worth 4.38 billion Euros (equivalent to 4.78 billion USD)... This shows that there is still a lot of room for rubber exports to this market, so domestic enterprises need to diversify products and increase the proportion of processed rubber to increase export value.

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