Market and product

Natural rubber prices will continue staying low in the next two years as supply has exceeded demand.

Vietnam and other countries with large rubber outputs such as Thailand, Indonesia and Malaysia have expanded areas under rubber cultivation to cash in on a price surge in previous years, according to the Vietnam Rubber Association (VRA).

Tran Thi Thuy Hoa, secretary general of VRA, said the local rubber growing area was earlier expected to reach 800,000 hectares in 2020 as indicated in the Prime Minister’s Decision 124. In reality, the total area had reached 955,000 hectares by the end of 2013.

In 2005-2011, the steady rise in rubber prices prompted many countries to expand rubber farms worldwide by 1.44 million hectares.

The total area under rubber cultivation had risen to some 12.5 million by end-2013, with total output of 12.04 million tons, while total demand was around 11.4 million tons.

The amount in excess estimated at 1.4 million tons during the 2011-2013 period has piled pressure on rubber prices.

VRA forecast the market demand for rubber will continue to grow. However, the association recommended businesses reduce production in this period of time to stabilize rubber prices.

Vietnam, Thailand, Malaysia, Indonesia and India will sit down together in the coming weeks to discuss measures to check rubber supply, as well as to stop prices from falling further, Hoa said.

Rubber prices in the Central Highlands and Southeast regions last week were VND22,000 per kilogram for SVR10 and VND27,100 for RSS3, down VND200 per kilogram compared to September 30.

According to the Ministry of Agriculture and Rural Development, Vietnam exported 705,000 tons of rubber worth US$1.25 billion in January-September, down 2.4% in volume and nearly 22% in value year-on-year. The export price of rubber in the last eight months averaged out at US$1,800 per ton, falling over 24% compared to the same period last year.