Rubber industry needs better adaptation to market
The rubber industry of Vietnam is facing a dire need to better adapt itself to the market situation as it is likely to be affected by the US-China trade tension that is forecast to not end soon.
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Vietnam is the world’s third biggest natural rubber producer. In 2017, the nationwide rubber farming area reached 969,700ha, generating nearly 1.1 million tonnes of latex.
About 1.06 million tonnes of rubber worth US$1.45 billion were exported in the first nine months of this year, up 19.9% in volume but down 10% in value from 2017, according to the Ministry of Agriculture and Rural Development.
China is the largest consumer of Vietnamese natural rubber, purchasing more than 60% of the total natural rubber export volume. The export volume and value to China are still on the rise, showing the industry’s dependence on this market.
To Xuan Phuc, a specialist from the US-based Forest Trends organisation, said the US-China trade war will surely affect Vietnam’s rubber industry.
He elaborated that China is the main importer of material rubber from Vietnam to use for tyre manufacturing. Meanwhile, the US has imposed high tariffs on Chinese auto components shipped to this country. As a result, Vietnam’s rubber exports to China will be influenced.
Additionally, many studies predict that natural rubber prices in the world market until 2030 are unlikely to bounce back to the level in 2011.
Managerial agencies and the Vietnam Rubber Association have warned against production expansion. However, this warning has just been applicable to businesses and large-scale rubber plantations.
In the meantime, more than 60% of the total natural rubber output in the country comes from small farms, whose adaptation to the market demand remains limited. Therefore, the sector will still have to face numerous difficulties in the time ahead, insiders said.
