Vietnam rubber output to dip to six-year low for 2016

The reduction comes about as part of a national strategy to curb the global market supply in an effort to buttress higher sales prices, said the official.

In addition, the ongoing drought has delayed the rubber latex process and reduced output, he said.

Vietnam was last year the third-largest natural rubber producer in the world, trailing Thailand and Indonesia, according to official figures from the General Statistics Office (GSO).

China, India and Malaysia were the top three export markets in descending order of magnitude.

The GSO figures for the four months leading up to May this year show Vietnam has exported an estimated 312,000 metric tons of rubber, which is up 26.7% from a year ago.

However, despite the apparent uptick in the January-April period, natural rubber demand and prices are expected to remain weak throughout the remainder of 2016, said the GSO, and increase only marginally in 2017.

Earlier this year in February, the International Tripartite Rubber Council (ITRC) said members Thailand, Malaysia and Indonesia, the world top three rubber exporters, would cut exports for 2016 by 615,000 metric tons.

The World Bank released a commodity report on April 26 that said thanks in large part to the ITRC export quota scheme that went into effect in March, natural rubber prices rose 4% in the early months of 2016

Over the longer term, the Freedonia Group projects the Asia/Pacific region to post the fastest growth in rubber consumption through 2019 and will account for nearly two-thirds of global demand in that year. 

Through 2019, six of the seven fastest growing national rubber markets worldwide will be located in the Asia/Pacific region.  Indonesia, India, and Thailand are expected to post the fastest growth. 

Demand for rubber in China, Malaysia, and Vietnam will also advance rapidly, benefiting from gains in manufacturing activity. 

China will remain by far the world largest rubber market, representing over half of the Asia/Pacific total in 2019.  Demand for rubber in Central and South America and the Africa/Mideast region will rise at solid rates also, benefiting from growth in their tyre industries.

Demand for rubber will advance at below average rates in North America and Europe through 2019, said the Freedonia Group.