Slow demand means hard year for rubber

With global rubber prices continuing to fall after a rout last year, things are expected to remain very difficult for the industry, the State-owned Vietnam Rubber Group has warned.

With demand too not hot last year Vietnam's exports fell by 0.7 percent even as prices plummeted by 28 percent, Tran Thoai, Deputy General Director of the VRG, told a review meeting in HCM City on February 10. 

The average price was around VND37.3 million (US$1,751) per tonne compared to VND51.8 million (US$2,431) in 2013. It is expected to fall to around VND31 million (US$1,408), he said. 

The group has urged its member companies to try and cut production costs to around VND30 million (US$1,401) per tonne from the current VND36 million (US$1,682). 

Vo Sy Luc, VRG Chairman, said the group planned to focus on producing rubber-based products with high global demand. 

He called on member companies to research into intercropping other crops with rubber to increase income. 

Speaking at the meeting, Minister of Agriculture and Rural Development Cao Duc Phat called on the group to restructure to increase value addition and ensure sustainable development. 

"The country exports nearly US$2 billion worth of raw rubber, and imports large quantities of rubber-based products at much higher cost, and this requires the industry to tweak its product structure," he said. 

"With supply exceeding demand, the industry also needs to control rubber output and stimulate domestic demand besides slashing production costs." 

The group has set itself a profit target of VND2.53 trillion (US$118.7 million) and revenue target of VND20.92 trillion (US$982.48 million), or just 87 percent of last year's figure.

It is expected to grow rubber on 416,000ha this year, including several thousand hectares in Laos and Cambodia, an increase of more than 10,000ha from 2014.
VNA/VOV.VN