The Billion-Dollar Product from Vietnam: A Global Frenzy with Prices Soaring to a 2-Year High, China as its Top Patron

Rubber is one of Vietnam’s billion-dollar export commodities in recent years. Since the beginning of 2024, rubber has been witnessing a significant growth rate. According to data released by the General Department of Customs, in July, Vietnam’s rubber exports reached 186,033 tons, worth $307.9 million, down 15.3% in volume but up 7.3% in value compared to the same period last year.

In July, the export price of rubber reached $1,655/ton, up 2.9% compared to the previous month and up to 26.8% over the same period in 2023. This is also the highest price achieved in the past 2 years, since June 2022.

In the first 7 months of the year, Vietnam’s rubber exports reached 912,725 tons, worth $1.4 billion, down 7.5% in volume but up 5.9% in value compared to the same period last year. The average export price of rubber in the first 7 months was $1,551/ton, up 14.5%.

In terms of consumption markets, Vietnam’s rubber exports to the Chinese market tend to decrease from the beginning of the year, but other markets have increased strongly. In July, Vietnam’s rubber exports to the Chinese market reached 127,664 tons, worth $206.73 million, down 27.2% in volume and 8.6% in value compared to the same period in 2023. This is also the 6th consecutive month that rubber exports to this market have decreased compared to the same period last year.

Therefore, in the first 7 months of the year, exports to China only reached 617,033 tons, worth $924.63 million, down 18.6% in volume and 8.2% in value compared to the same period in 2023. With this result, China remains Vietnam’s largest rubber export market, but the market share has decreased to 67.6% from 76.8% in the same period.

Meanwhile, the volume of rubber exports to the next largest markets, India and South Korea, grew by 19.9% and 5.8%, respectively, in the first 7 months of the year, reaching 74,277 tons and 27,793 tons, accounting for 8.1% and 3% of the export market share, respectively.

In addition, rubber exports to many other markets also increased significantly, such as Russia up 15.4%, Taiwan up 16.3%, Turkey up 12.1%… Especially, Sri Lanka up to 317.8%, Malaysia up 121%, and Belgium up 263.4%…

Thanks to the significant increase in rubber prices compared to 2023, Vietnamese rubber companies are having more favorable business results. Recently, the Association of Natural Rubber Producing Countries (ANRPC) has adjusted its forecast for global rubber demand in 2024 to 15.74 million tons and reduced its forecast for global natural rubber supply for the whole year to 14.5 million tons.

This means that the global market is expected to be short of 1.24 million tons of natural rubber this year, higher than the 1.12 million tons the association forecast in May 2024. ANRPC also warned that the shortage of natural rubber supply could last until 2028, with a shortage of about 600,000 – 800,000 tons/year.

The fear of supply shortage in the market, especially the reduction in production in the main exporting countries, including Vietnam, has pushed up global and domestic rubber prices since the beginning of the year. The weather shift between El Niño and La Niña has had a negative impact on the crop season. Continuous heavy rains have caused flooding in rubber plantations, slowing down the harvesting process and reducing the supply of rubber to the world market. The leading rubber-producing countries in the world, such as Thailand and Indonesia, have all recorded declines in production recently.

Vietnam Commodity Exchange (MXV) predicts that the demand for rubber in the second half of 2024 is likely to maintain a positive trend as it is now. With a series of the latest economic data from the US showing a recovery in the world’s largest economy, although concerns about a prolonged weak economic recovery in China will limit the increase in natural rubber prices.