Higher prices expected to boost Vietnam's rubber export revenue

Vietnam's rubber exports fell during the second quarter of 2024, driven by stagnating demand in the Chinese market amid the country's ongoing economic uncertainty.

According to data compiled by the General Administration of Customs of China, the country imported 3.41 million tons of rubber in the first six months of 2024, with a total value of 5.56 billion USD. This marks a decrease of 16.8% in volume and a decrease of 8.9% in value compared to the corresponding period in 2023.

Vietnamese rubber imports into China reached 564,000 tons, with a total value of 802 million USD, in the first half of 2024. This marks a decrease of 15.4% decrease in volume and a decrease of 10.8% in value compared to the corresponding period in 2023. Additionally, Vietnamese rubber accounted for 16.51% of China's total import volume and 14.43% of the total import value during this time frame.

On the other hand, the General Department of Customs of Vietnam reported that Vietnam exported 312,000 tons of rubber in the second quarter, with a total revenue of 499 million USD. This represents a decrease of 24.8% in volume and a decrease of 17.8% in revenue compared to the first quarter of 2024. Compared to the second quarter of 2023, this was a decrease of 19.1% in volume and a decrease of 3.8% in revenue.

Overall, Vietnamese rubber exports reached 726,650 tons in the first half of the year, with a total revenue of over 1.1 billion USD. This marks a decrease of 5.2% in volume but an increase of 5.5% in value compared to the corresponding period in 2023.

Notably, rubber exports saw a significant increase in prices compared to 2023, which presents a promising outlook for export revenue growth within Vietnam's rubber industry.

According to the Agency of Foreign Trade under the Ministry of Industry and Trade, the average export price of various types of rubber to China in the first six months of 2024 saw a noticeable increase compared to the corresponding period in 2023. Accordignly, SVR 20 exports saw the most significant increase at 19.3%, followed by Latex at 18.9%, SVR CV60 at 15.5%, reclaimed rubber at 14.7%, SVR 5 at 14%, and SVR 10 at 13.4%. Ultimately, rubber export prices reached an average of 1,525 per ton across all markets in the first half of 2024, which marks an increase of 11.3% increase compared to the corresponding period in 2023.

During the second quarter of 2024, the price of raw rubber latex nationwide increased along with the global market trend. The primary driver for the increase in domestic rubber prices was the shortage of natural rubber supply, particularly from Thailand and Indonesia.

On the other hand, rubber prices on major Asian exchanges reached their highest level within the last three years in early June 2024, driven by supply shortages due to changing weather conditions and increased demand for tire production. However, prices began to decline towards the end of the second quarter of 2024 as supply increased with the onset of the new harvesting season in rubber-producing countries.

The Agency of Foreign Trade forecasts that rubber prices will maintain its their trajectory in the near future due to the recovery in demand from the tire manufacturing sector. Conversely, rubber yield in Thailand and Indonesia is expected to drop due to the transition between El Nino and La Nina weather patterns.

Vietnamese rubber companies are experiencing improved business performance with the significant increase in rubber prices compared to 2023.

Le Anh Tuan, General Director of Ea H'leo Rubber One Member Company Limited in Dak Lak province, reported that the company sold 2,873 tons of rubber in the first six months of 2024, generating nearly 117 billion VND in revenue. With an average selling price of 40.7 million VND per ton, compared to an average production cost of 32 million VND per ton, Ea H'leo Rubber achieved a profit of over 24 billion VND in the first half of the year.

Similarly, Kon Tum Rubber Company Limited extracted 4,601 tons of rubber and sold 4,992 tons in the first seven months of 2024. The company sold rubber at an average price of 41.06 million VND per ton, which is nearly 9 million VND higher than the average selling price in 2023. According to Ngo Van Man, Deputy General Director of Kon Tum Rubber Company Limited, the company's revenue reached 263 billion VND in the last seven months, with rubber sales contributing 205 billion VND.