Rubber latex rises in price, businesses benefit

November 23, 2021 - 09:49

Rubber latex businesses are joyful to report profits thanks to the skyrocketing price from the beginning of this year.

Exploiting rubber latex. — Photo

HÀ NỘI — Rubber latex businesses are reporting positive profits thanks to skyrocketing prices since the beginning of this year.

The natural rubber industry has emerged as a remarkable bright spot, as the COVID-19 pandemic negatively affects the production and business of all economic sectors.

Rubber products increased by 13.9 per cent in volume and 46.5 per cent in value in 10 months of this year over the same period last year, reported the Ministry of Agriculture and Rural Development.

The average export price of many rubber products in 10 months reached US$1,680 per tonne, up 4.1 per cent over the same period last year.

A report by the Association of Natural Rubber Producing Countries (ANRPC) said that the total global demand for natural rubber this year is estimated to grow by 9.3 per cent year-on-year to 14.1 billion tonnes. Meanwhile, the supply is estimated to grow only 2 per cent, reaching 13.86 billion tonnes.

ACB Securities Company (ACBS) said that the rising demand for rubber was due to the recovery of the global economy after the pandemic when vaccination rates were increasing.

The recovery of the global economy would stimulate transportation activities in both civil and industrial sectors, creating growing demand for tyres, a key driver of rubber demand.

High rubber prices have had a strong impact on the profit of the rubber industry since the beginning of this year.

In nine months of the year, Việt Nam Rubber Group achieved net revenue of VNĐ16.7 trillion (US$726 million) and profit after tax of VNĐ3.8 trillion, up 37.7 per cent and 87.7 per cent respectively over last year.

The company said that the positive business results came from its proactive response in accordance with the new normal state of production. At the same time, the selling price of rubber products increased and stabilised; the selling price of wood products and rubber industrial products also increased, helping the gross profit and profit after tax of most of the group's capital-contributing units to improve significantly compared with the same period last year.

A report by Đồng Phú Rubber Joint Stock Company showed that its revenue reached VNĐ727 billion in the first nine months of the year, a year-on-year increase of 15 per cent, profit after tax reached nearly VNĐ161 billion, up 23.2 per cent.

Notably, this enterprise exported $686,000 of rubber in September. Its export value reached $5.65 million from the beginning of the year to the end of September, up 166 per cent.

Tân Biên Rubber Joint Stock Company also had very positive business results in the first nine months of the year, with profit after tax reaching VNĐ150 billion, up 56 per cent over the same period last year.

Bà Rịa Rubber Joint Stock Company saw a revenue of the first three quarter reaching VNĐ243 billion, up 20 per cent over the same period; profit after tax is more than VNĐ68 billion, nearly three times higher than the same period last year.

Notably, Đắk Lắk Rubber Investment Joint Stock Company has converted losses into profits.The business reached VNĐ61.4 billion in the first three quarter, while it lost more than VNĐ10 billion in the same period last year.

A company's representative said that the fourth quarter usually had the highest exploited rubber output, accounting for nearly 40 per cent of the whole year's output. This would help the company maintain high growth momentum in the first three quarters of the year, as well as achieve outstanding business results in the whole of the year.

ACBS said that the natural rubber industry was likely to have a shortage of supply in the near future, but the price might fall due to the slow down in auto production because of a shortage of electronic chips, even though the demand for cars in China is rising.

Statistics from the General Department of Customs show that China is the most important rubber export market of Việt Nam. China consumed 70 per cent of Việt Nam's rubber exports, equivalent to 901,734 tonnes in the nine months of the year.

The decline in rubber prices was mainly attributed to the automotive service group, while lower grade rubbers saw a slight increase in prices thanks to the resumption of production around the world.

ACBS expects that the average rubber price this year will be about 31 per cent higher than the average level last year.

According to ACBS, although Việt Nam is the fourth largest rubber exporter in the world, it is still facing some pressure to meet global quality standards for natural rubber products.

Vietnamese rubber companies still need to make more efforts to meet higher standards and expand export markets.

Analyst Huỳnh Anh Huy from ACBS commented that the strong increase in auto demand from China was a positive factor for rubber exports, but the shortage of microchips had limited the upward momentum of rubber prices due to the slowing down operation of auto production. — VNS