Rubber industry suffers from falling prices

Plunging rubber prices will reduce profits of the Vietnam Rubber Group (VRG) in 2016, as heard during a conference held in Ho Chi Minh City on January 15 to review the company’s performance and set out new tasks.

According to Tran Thoai, VRG deputy general director, the continuous drop in natural rubber prices in recent years has negatively affected the group’s operations - despite its positive yields in other units. 

The average price was almost VND50 million (US$2,250) per tonne in 2013, falling to VND37.3 million (US$1,678) per tonne in 2014 and VND30.5 million (US$1,372) in 2015. The year 2016 is expected to experience a further decrease of VND5 million (US$225) on each tonne.

As a result, the VRG’s revenue only met 98% of its set target last year. 

rubber industry suffers from falling prices hinh 0
Two workers are collecting rubber latex. (

The group is aiming for a VND17.8 trillion (US$801 million) turnover this year, with projected profit above VND2.5 trillion (US$112.5 million). It plans to reduce the volume of exploited latex in 2016. 

Deputy Minister of Agriculture and Rural Development Ha Cong Tuan suggested the VRG capitalize on other potential units, such as rubber tree wood processing and tyre manufacturing. 

The group should focus on the Japanese and Chinese markets, he said. 

Japan is capable of importing 200,000 tonnes of high-quality rubber latex, of which Vietnam can supply just 700 tonnes. Meanwhile, China is the destination for more than 50% of Vietnamese latex shipped overseas. 

The deputy minister ordered the VRG to re-evaluate its rubber development project in the northwest region, which has about 27,400 hectares of rubber plantation, and to promptly ask for relevant State support. 

The northwest is a poor region, thus the project would help boost local socio-economic growth.