Rubber prices rise in the second quarter, Vietnamese rubber farmers benefit

According to a foreign media report on July 28, thanks to the increase in rubber prices, many Vietnamese rubber companies recorded significant growth in their revenue and profits in the second quarter
.
Analysts predict that due to strong demand and tight supply, rubber prices will remain high until 2021
.


In the second quarter performance report, Dong Phug Rubber JSC recorded a net revenue growth of 11%, reaching 2,180 VND (9.
5 million US dollars)
.
In the same period, the company's consumption reached 2,431 tons, an increase of 35%, and the average selling price was VND4.
59 million per ton, an increase of 50% year-on-year
.


Coincidentally, another rubber company, Daklak Rubber JSC, had a net profit of more than 32 billion VND in the second quarter, which also benefited from the increase in rubber prices.
The company lost 26 billion VND in the same period last year
.


The Foreign Trade Bureau under the Ministry of Industry and Trade predicts that in the first six months of 2021, Vietnam's rubber exports will reach about 681,000 tons, worth 1.
15 billion U.
S.
dollars.
Compared with the same period last year, the export volume will increase by 41.
3% and the export value will increase by 79.
9%.

.


  At the same time, according to the estimates of the Association of Natural Rubber Producing Countries (ANRPC), in the first quarter of 2021, global rubber production decreased by 12.
5% ​​year-on-year, but rubber consumption increased by 15.
7% in the second quarter
.
In the first half of 2021, global rubber production reached 4.
5 million tons, and total consumption was about 5.
4 million tons
.
Therefore, the supply gap exceeds 800,000 tons
.
The decline in total rubber production began in 2020, but the gap between supply and demand will widen in 2021
.


  According to analysts at ACB Securities Ltd, some reports show that due to the long-term fall in rubber prices, farmers have suddenly abandoned their rubber plantations, which means that plants are prone to diseases
.
About 65% of the world's natural rubber is produced in Southeast Asia
.
However, rubber trees in some Southeast Asian countries, such as Thailand and Malaysia, are currently infected with serious pests and diseases
.
Large areas of rubber trees have also been infected in countries such as Sri Lanka and India
.


  Faced with this situation, the VietNam Rubber Association issued a warning to its members that if the disease spreads to the country, be prepared, especially members of Cambodian rubber plantations that are geographically close to Thailand
.


  In fact, during the period of rubber prices entering the bear market from 2013 to 2019, the development of the rubber plantation industry has been under pressure
.
In Indonesia, the new industrial crop planting area is mainly oil palm, which has a shorter harvest time than rubber
.


  ACBS stated that there will be a supply shortage in the rubber market in the first half of 2021
.
The tight supply situation will continue until the beginning of the rainy season in 2021
.
In addition, the price of natural rubber is highly correlated with the price of Brent crude oil and synthetic rubber raw material butadiene.
Therefore, oil prices have remained high this year, and rubber prices are likely to rise again
.


  ACBS believes that since March, the second wave of the epidemic in India, one of the world's important rubber exporters, will hinder the substantial increase in rubber demand in 2021, but the agency still predicts that rubber prices will rise by 44% this year
.