Rubber exports fall sharply

Tyre manufacturers spent US$243 million on the import of raw materials, pushing the sector’s trade surplus to US$370 million.

According to the Ministry of Agriculture and Rural Development (MARD), rubber exports in April alone were estimated at 44,000 tonnes, worth US$610 million, down 12.9 percent in volume and 24.2 percent in turnover. The average rubber export price was US$2,683 per tonne, down 8.7 percent from last year. The price of SMR3L rubber in the first week of April was just US$2.780 per tonne, down 1.8 percent. As Vietnam’s biggest rubber market, China reduced its imports by 20.3 percent in volume and 22.4 percent in value compared to 2012.

Meanwhile, rubber exports to Malaysia increased by 15.8 percent in volume, not much in revenue.

The world rubber market’s outlook is grim, with reserves estimated at just 2.17 million tonnes by 2014. Those at Thanh Dao - China’s largest rubber centre already hit a record high level of 366,900 tonnes in mid- April while rubber prices in Thailand, the world’s largest manufacturer, rubber prices dropped by 1.5 percent to US$2.84 per kilo by the end of April.

Vietnam is the world’s third largest rubber exporter. However, its tyre manufacturing businesses are on the verge of bankruptcy due to material shortages. Its 220 rubber processing businesses consume hundreds thousands of tonnes of raw material a year.

A rubber latex export business owner says his company exports as much as 90 percent of total output. If its products were sold in the country, they would have to pay 5 percent VAT.

Professor Nguyen Viet Bac from the Institute of Material Chemistry says rubber businesses are mostly state-owned and limited in forest cultivation and rubber latex production.

The Vietnam Rubber Association reports that raw rubber exports account for 87 percent of the country’s total rubber output, often at low value-added prices.

The Central Highland Steering Committee has a plan afoot to promote the intensive processing and diversification of rubber products. Total rubber plantations cover 242.810 hectares with an annual output reaching 165 - 170,000 tonnes, lower than in the southeastern region.

The reason is the Central Highlands has only invested in rubber latex factories. In Dak Lak province, a newly-built rubber processing factory has a design capacity of 15,000 tonnes of latex while six existing factories produce only 40,000 tonnes of latex per year.

Many experts argue that for the sustainable growth of the rubber sector, it is imperative to draw up long-term contracts between processing businesses and retail companies with fresh impetus given by the government under its incentives policies.