Vietnam’s rubber exports are still favorable due to the world’s supply shortage

According to statistics from the General Department of Customs, Vietnam’s rubber exports in March 2024 reached nearly 116.1 thousand tons, worth 180.36 million USD, an increase of 0.2% in volume and an increase of 10%. in value compared to March 2023.

In March 2024, the average export rubber price reached 1,554 USD/ton, up 4.9% compared to February 2024 and up 9.9% compared to March 2023. In the first 3 months of 2024, the average export rubber price reached 1,466 USD/ton, up 5.3% over the same period in 2023.

CHINA IS STILL THE BIGGEST MARKET

In March 2024, China is still Vietnam’s largest rubber export market, accounting for 52.83% of the country’s total rubber exports, with nearly 61.34 thousand tons, worth 90.72 billion VND. million dollars. Compared to March 2023, rubber exports to China in March this year decreased by 29.3% in volume and 24.3% in value.

Accumulated in the first 3 months of 2024, Vietnam exported 287.85 thousand tons of rubber to China, worth 407.82 million USD, down 1.6% in volume, but up 2.7% in value compared to same period in 2023.

Notably, in March 2024, rubber exports to a number of markets such as India, Germany, Turkey, Russia, Sri Lanka, Belgium, the United States… grew strongly in both volume and value compared to with March 2023.

Vietnam’s export rubber price increased in the first 3 months of the year and by early April, some days it exceeded 1,500 USD/ton.

The main reason for the recent spike in rubber prices stems from concerns about supply shortages in the market. Prolonged heavy rain combined with warnings of storms and floods in Thailand, the world’s largest rubber supplier, puts the market at risk of supply shortage.

Moreover, the period from February to April is also the low harvest time in Southeast Asian countries. Combined with being affected by bad weather, supply concerns become more serious, thereby supporting price increases.

In addition, positive signals from demand outside of China are also factors contributing to supporting prices in the first months of 2024. India – the world’s leading rubber importer – has decided to reduce import taxes. exports of certain types of electric vehicles produced by automakers committing to invest at least 500 million USD and begin domestic production within 3 years.

This promises to be a new step for the automobile industry of the country of billions of people and comes with a more positive demand for rubber for tire production.

WHY ARE RUBBER PRICES Fluctuating?

In the first three months of 2024, the world rubber market witnessed many new records on the Osaka Exchange (OSE) in Japan and the Shanghai Exchange (SHFE) in China.

Notably, rubber prices traded on the OSE reached a 7-year high on March 15 with a closing price of 352 Yen/kg, up 36% and 57% respectively compared to the beginning of 2024 and the same period last year. 2023.

In March, rubber prices at China’s SHFE Department increased dramatically, with an increase of 13% compared to February 2024, reaching a three-year high of 15,480 yuan/ton and 33% higher than the same period last year. before.

From the beginning of April 2024 until now, rubber prices on Asian exchanges have fluctuated in opposite directions, prices increased in Japan and Shanghai, while prices decreased in Thailand.

At the Osaka Exchange (OSE) on April 9, 2024, the near-term delivery price of RSS3 rubber was at 345.3 Yen/kg (equivalent to 2.27 USD/kg), up 2.1% compared to the last March 2024 and increase by 73.6% over the same period in 2023. Rubber futures prices in Japan increased due to unfavorable weather conditions in rubber producing areas and a weaker Yen,

At the Shanghai Futures Exchange (SHFE) on April 9, 2024, the near-term RSS3 rubber price was at 14,840 CNY/ton (equivalent to 2.05 USD/kg), an increase of 3.4%. compared to the end of March 2024 and increased by 29.9% over the same period in 2023.

Explaining the cause of the sudden increase in rubber prices in March and the first half of April, analysts say that geopolitical tensions in the Middle East pushed oil prices up. While rubber prices always fluctuate in the same direction as oil prices, because artificial rubber is produced from oil, when artificial rubber prices increase, natural rubber prices will increase.

However, from mid-April 2024 until now, oil prices have decreased slightly, causing rubber prices to fluctuate this week. At the Tokyo Commodity Exchange (TOCOM) at the time of the survey at 6:00 a.m. on April 26 (Vietnam time), the price of rubber for futures delivery in May 2024 decreased by 0.72% to 304.8 yen/ kg at the time of the survey at 6:00 a.m. on April 26 (Vietnam time).

On the same morning of April 26, 2024, on the Shanghai Futures Exchange (SHFE), RSS3 rubber price for May 2024 futures delivery was at 13,805 Yuan/ton, down 1.29%.

SUPPLY SHORTAGE, RUBBER EXPORT IS STILL FAVORABLE

It is forecasted that in the second quarter of 2024, rubber exports will still be favorable. According to estimates, rubber supply may continue to be in short supply in 2024 – 2025, the global market may have a shortage of about 600-800 thousand tons per year.

This supply-demand gap comes from global natural rubber consumption that can maintain a growth rate of 4-6% per year, thanks to the recovery of the global automobile and tire manufacturing industry. , especially in the Chinese market. Tire production and export activities of Thailand and India also grew positively and are expected to continue to increase in 2024.

However, the global natural rubber supply is expected to only grow by an average of 1-3%/year in the period 2024-2025. Rubber planting area in Thailand and Indonesia continues to decrease due to tree diseases. rubber and the trend of converting to other industrial crops with higher economic efficiency.

Rubber harvest efficiency has also declined in recent years due to disease and extreme weather. In particular, 2024 is forecast to be a harsh year for rubber trees when transitioning between El Nino and La Nina phenomena, causing many fluctuations in the peak exploitation season in Southeast Asia.

Mr. Nguyen Ngoc Quynh, Deputy General Director of Vietnam Commodity Exchange (MXV), predicted that in the second quarter of 2024, world rubber prices will likely no longer be “too hot” like in the first months of the year. Fears that rubber demand will slow down in China – the world’s largest importer of this product – may be the main pressure on prices in the near future.

Specifically, the economic situation in China is not very positive, in particular, automobile sales – the leading rubber-using industry – are showing signs of slowing down.

On the domestic market, Vietnam’s export rubber prices are expected to be more strongly affected due to concerns about weakening demand in China when nearly 80% of our country’s rubber is exported to this country.