Market and product

The domestic rubber price has surged 68% compared to January 15 to VND40 million (US$1,788) a ton.

According to the rubber website thitruongcaosu.net, the free-on-board (FOB) prices of SVR CV, SVR L, SVR 10 and SVR 20 rubber products are quoted at VND40.8 million, VND38.5 million, VND31.5 million and VND31.4 million per ton respectively, up VND100,000-200,000 a ton versus May 11.

Rubber has rocketed by 68-75% versus January 15 when SVR CV, SVR L, SVR 10 and SVR 20 rubber were sold at VND28 million, VND26.87 million, VND23.8 million and VND23.7 million per ton respectively.

The Vietnam Rubber Association (VRA) ascribed the rubber price rises to drought that has sent rubber output of Thailand, one of the world’s leading rubber producing countries, slumping by 50%.

Other reasons are the world oil price increase and higher global consumption of automobile tires triggered by rising demand for new cars.

When the rubber price dropped due to oversupply in Vietnam in previous years, VRA urged rubber growers and companies to replant their old trees. This has also resulted in global supply falling as Vietnam is the world’s fourth biggest rubber exporter.

Earlier this year, Tran Ngoc Thuan, general director of the Vietnam Rubber Group (VRG), said if the world oil prices fell further, domestic rubber would drop to below VND20 million (US$899) per ton. However, the oil price has picked up significantly, contributing to the rubber price improvement.

This is good for VRG since latex sales make up more than half of the group’s total revenue.

VRG posted revenue of VND18 trillion (US$806.8 million) last year, with VND10 trillion (US$448.2 million) of it contributed by latex sales. Latex averaged out at VND30.5 million (US$1,367) in 2015, equivalent to 82% of 2014.