Vietnam's ruber consumption demonstrates improvement

As per the report by the Agency of Foreign Trade under the Ministry of Industry and Trade, estimated rubber exports for the first five months of 2023 are expected to amount to 580,000 tons, valued at USD 803 million. This represents a decline of 3.3% in volume and 23.7% in value compared to the corresponding period in the previous year.

The export of rubber from Vietnam has experienced a decline in recent months, mainly due to the decrease in worldwide demand for rubber products as a result of economic challenges and elevated inflation. According to Pham Van Thanh, a member of the Board of Directors at the Vietnam Rubber Group (VRG), the demand for rubber products is largely determined by consumers. In periods of global economic instability, there is a tendency for consumers to adopt tight spending, which can have a significant impact on the demand for rubber products.

Vietnam's rubber exports have experienced a decline in several markets, particularly in major markets such as India, the United States, and Europe, as a result of the decrease in global demand when compared to the corresponding period in the previous year. Moreover, the prolonged recovery of the Chinese economy has had a substantial impact on the export pricing of Vietnam's rubber, given that China has been the primary market for several years.

The price of Vietnamese rubber has remained low since the beginning of the year due to the unfavorable conditions of the global market. Nevertheless, there are indications of improvement in the consumption scenario. As per Pham Van Thanh, the improved rubber consumption in recent months has resulted in a significant reduction of VRG's rubber inventory to approximately 40,000 tons, in contrast to the inventory of over 80,000 tons recorded at the conclusion of 2022.

According to the Agency of Foreign Trade's report, it is projected that Vietnam's rubber exports will amount to approximately 110,000 tons, valued at USD 149 million, in May 2023. This represents a 25% increase in volume and a 23% increase in value as compared to the preceding month of April 2023. The presented data indicates an improvement in Vietnam's rubber consumption compared to the initial period of the year.

It is anticipated that rubber consumption in Vietnam will remain stable in the immediate future, despite China's escalating importation of rubber. According to China Customs data, the volume of rubber imports in the first four months of the current year amounted to approximately 2.81 million tons, suggesting a 14% increase year on year. 

The purchase of Vietnamese rubber by China is on the rise. During the initial four months of the current year, the nation imported 498,000 tons of rubber from Vietnam, showing a 19% increase in volume as compared to the related period in 2022. Vietnam has emerged as the second largest contributor to China's rubber imports, forming 17.71% of the total imports during the initial four months of 2023. This figure is higher than the previous year, which stood at 16.95%.

VRG has stated that the export price of rubber is unlikely to experience any positive changes from the present time until the end of 2023. VRG anticipates that starting from 2024, when the world's economic situation attains greater stability, the rubber market and its corresponding pricing will exhibit a more favorable outlook compared to the present scenario.

In the context of decreased rubber prices, several rubber companies in Vietnam have opted to utilize PEFC-CoC sustainable rubber, despite its comparatively elevated cost in comparison with traditional latex. This strategy not only enhances the economic efficiency of these companies but also elevates their reputation as producers of sustainable rubber.

As per Mr. Pham Anh, the Deputy General Director of Binh Long Rubber Company, which is headquartered in Binh Phuoc province, the company is expected to sell over 1,000 tons of certified sustainable rubber latex this year. The aforementioned latex will be sold at a higher cost of 25-30 USD/ton in comparison to regular latex. In the past years, Binh Long has consumed sustainable certified rubber latex, but only about 500 tons/year.

The Vietnam Rubber Industry Group achieved the sale of approximately 50,000 tons of rubber latex in the year 2022, which was accompanied by sustainability certificates.