Reported by Ngan Anh
Thanh Nien News (Hanoi)
Vietnam, one of the world’s major rubber exporters, is faced with plummeting natural rubber prices because of the global recession and the increasing use of synthetic rubber, according to a conference in Hanoi Tuesday.
“In the context of the current economic slowdown, rubber demand from the auto tire industry has dropped,” Nguyen Tri Ngoc, head of the Cultivation Department, said.
Global tire output is expected to grow slower, at 2-3 percent, until 2010, compared with 3.4 percent in 2007, according to the Vietnam Rubber Association.
More than half of the world’s rubber supply is used in tire production.
Tran Duc Vien, director of the Hanoi Agriculture University, said the plummeting crude oil prices have increased the use of synthetic rubber, dragging rubber costs down.
Oil prices have tumbled 72.8 percent from a record $147 per barrel on July 11.
The peak period for Vietnam’s latex production is from September to December, Vien said, bringing a huge supply of rubber to the market and depressing prices.
Rubber prices decreased to around $1,300 per ton in December from $2,700 in 2007, the Ministry of Agriculture and Rural Development said, adding they are forecast to fall further next year.
In other problems, the country has many farms with old rubber trees and low output. Some firms that have invested in growing rubber trees in Laos and Cambodia face fierce competition from China and Thailand.
Government bailout
The government plans to buy 100,000 tons of rubber to reduce farmers’ stockpiles, reduce interest on bank loans to rubber firms and not increase the area under rubber, Ngoc told reporters on the sidelines of the conference.
“Vietnam will grow saplings to replace old rubber trees on some 150,000 hectares. We can tap latex from them after six years.
“The global economy may recover after 2010, and rubber from the new trees could enjoy high prices.”
The country would also improve trade promotion, consolidate traditional markets like China, South Korea, Taiwan and Russia, and expand potential ones like the US, Japan and the EU, the association’s general secretary Tran Thi Thuy Hoa said.
Vien said it should reduce shipments of raw rubber, reduce the reliance on China which now buys 60 percent of its total exports and sell more to rich nations.
Rubber firms should increase their investment in production, improve management and quality and develop trademarks, he added.
Vietnam, the world's fourth biggest natural rubber exporter after Thailand, Indonesia and Malaysia, shipped abroad 719,000 tons worth $1.4 billion last year, or 85 percent of its total output, according to the ministry.
“In the context of the current economic slowdown, rubber demand from the auto tire industry has dropped,” Nguyen Tri Ngoc, head of the Cultivation Department, said.
Global tire output is expected to grow slower, at 2-3 percent, until 2010, compared with 3.4 percent in 2007, according to the Vietnam Rubber Association.
More than half of the world’s rubber supply is used in tire production.
Tran Duc Vien, director of the Hanoi Agriculture University, said the plummeting crude oil prices have increased the use of synthetic rubber, dragging rubber costs down.
Oil prices have tumbled 72.8 percent from a record $147 per barrel on July 11.
The peak period for Vietnam’s latex production is from September to December, Vien said, bringing a huge supply of rubber to the market and depressing prices.
Rubber prices decreased to around $1,300 per ton in December from $2,700 in 2007, the Ministry of Agriculture and Rural Development said, adding they are forecast to fall further next year.
In other problems, the country has many farms with old rubber trees and low output. Some firms that have invested in growing rubber trees in Laos and Cambodia face fierce competition from China and Thailand.
Government bailout
The government plans to buy 100,000 tons of rubber to reduce farmers’ stockpiles, reduce interest on bank loans to rubber firms and not increase the area under rubber, Ngoc told reporters on the sidelines of the conference.
“Vietnam will grow saplings to replace old rubber trees on some 150,000 hectares. We can tap latex from them after six years.
“The global economy may recover after 2010, and rubber from the new trees could enjoy high prices.”
The country would also improve trade promotion, consolidate traditional markets like China, South Korea, Taiwan and Russia, and expand potential ones like the US, Japan and the EU, the association’s general secretary Tran Thi Thuy Hoa said.
Vien said it should reduce shipments of raw rubber, reduce the reliance on China which now buys 60 percent of its total exports and sell more to rich nations.
Rubber firms should increase their investment in production, improve management and quality and develop trademarks, he added.
Vietnam, the world's fourth biggest natural rubber exporter after Thailand, Indonesia and Malaysia, shipped abroad 719,000 tons worth $1.4 billion last year, or 85 percent of its total output, according to the ministry.
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