Natural rubber market is expected to rise over the projected horizon

Vietnam’s rubber export sharply decreasing in the first 6 months of 2020

According to statistics of the Ministry of Industry and Trade, in the first 6 months of 2020, Vietnam’s rubber export is estimated at 456,000 tons, with a turnover of $ 606 million, down 25.7% in volume and nearly 28% in value over the same period in 2019. The average rubber export price decreased 2.9% over the same period in 2019, down to 1,330 USD/ton. The main rubber import markets of Vietnam are Korea accounting for 18%, Cambodia (16.2%) and Japan (12.8%).

Source: VIRAC, MARD, VRA

The major proportion of the total rubber production in 2019 is still for exporting, accounting for 88%, domestic consumption only reached 12%. Vietnam’s domestic demand for rubber accounts for only 20% of the exploitable output, a decrease of 1.4% compared to 2018. This decline in output is due to the impact of the Covid-19 epidemic when production is interrupted. Exports of goods are stalled, resulting in a decrease in demand, and a decrease in natural rubber consumption. 

The average export price of rubber in the first half of the year was about 1,325 USD/ton, down 3.3% over the same period in 2019. China, India and South Korea were the 3 largest rubber consumption markets of Vietnam in the first 6 months in 2020, accounting for 68.2%, 4.8% and 3.2% market share respectively.

Source: ARNPC, General Department of Customs

In the first 7 months of 2020, Vietnam is the second largest rubber supplier to China, reaching 665.62 million USD, down 1.5% over the same period in 2019. Particularly in July 2020, the export value is considerably high. Rubber exported to the neighboring country reached 155.7 million USD, up to 35.3% over the same period last year. Vietnam’s rubber market share in the total import value of China in the first 7 months of 2020 accounted for 12%, up slightly from 11.5% in the first 7 months of 2019.

Domestic rubber material price movement

Domestic rubber material market mostly fluctuated in July 2020. Specifically, in Binh Phuoc, the purchase price of water latex decreased to 235 VND, raw rubber latex dropped by 100 VND/kg to 11,000 VND/kg. Latex price in Dong Nai remained stable, at about 9,600 VND/kg.

The Department of Agro-Processing and Market Development forecasts that, in the short term, rubber trade can be recovered as countries around the world are gradually removing social quarantine to recover economic growth. The reopening of the economy will boost demand and positively impact the rubber industry.

By August 2020, rubber raw material prices on the domestic market increased and both the volume and value of rubber exports showed good signs to recover after the pandemic.

Natural rubber growth reversed the market

According to estimated statistics, Vietnam’s rubber export in August reached 220 thousand tons, worth about USD 267 million, up 8.5% in volume and nearly 9% in value compared to July 2020; Compared to August 2019, up 21.5% in volume and 9.3% in value, the average export price decreased by 10% over the same period in 2019 to USD 1,214/ton.

In the first 8 months of 2020, rubber exports were estimated at 905 thousand tons, worth USD 1.15 billion, down nearly 6% in volume and 12.6% in value over the same period in 2019, the average export price decreased. 7.2% over the same period in 2019, at USD 1,272/ton.

According to calculated statistics of the General Department of Vietnam Customs, in the first 7 months of 2020, the mixture of natural and synthetic rubbers (HS: 400280) is the most exported commodity, accounting for nearly 65 % of the country’s total rubber export volume, reaching 442.8 thousand tons. In fact, more than 98% of mixture of natural and synthetic rubbers are exported to the Chinese market.

Source: VIRAC, VRA

Natural rubber forecast by the end of 2020

According to the International Association of Rubber Producing Countries (ANRPC) – an organization consisting of 13 important rubber producing countries – the rubber industry has overcome the worst period due to the Covid-19 epidemic crisis. The market showed a lot of signs of recovery in the third quarter of 2020 after a sharp decline in the previous quarter.

Specifically, ANRPC forecasts world high demand in the third quarter of 2020 will only decrease by 2.9%, after the 14% decrease in the first 7 months of 2020 compared to the same period in 2019.

Due to the waterproof function and heat-resistant properties, natural rubber latex is an important source of raw materials for many industries, in which tire production consumes about 70% of total natural rubber. Forecast by the Ministry of Industry and Trade shows that the consumption of cars will continue to increase strongly in the coming years, especially when many FTAs ​​take effect. Specifically, by 2025, Vietnam’s car demand will reach about 800,000 – 900,000 units and the number is expected to reach 1.5 to 1.8 million units by 2030.  The phenomenon would pay the way for the growth of domestic tire consumption. It is forecasted that in 2020 and the coming years, car tire sales are likely to grow really fast, accounting for over 50% in terms of market value.


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