VIETNAM: Rubber trading bounces back after lull

Rubber exports to China via the Mong Cai Border Gate were rising significantly, reaching roughly 500-600 tonnes per day on average, said Le Van Xung of the Binh Long Rubber Company. Several days even saw 1,000 tonnes of rubber traded daily, he said.

The growing trade volume had helped raise rubber export prices, with a tonne currently selling for 23,000 yuan (US$3,651), up 3,000 yuan ($476) against January, Xung said.

According to the Association of Natural Rubber Producing Countries (ANRPC), demand for natural rubber in China is rising sharply as it needs to import more to offset a decreasing supply.

China's rubber reserve in the Shanghai Commodity Exchange has reduced 6 per cent against mid-January. Meanwhile, the market is expected to consume roughly 3.61 million tonnes of rubber this year, up 3 per cent over last year.

The Viet Nam Rubber Association (VRA) said that the price hike had been seen not only in China but also in other markets since the end of Tet (Lunar New Year). In the world market, a tonne of SVR 3L rubber reached US$3,450 on January 31, up $180 against January 3.

The price hike in the global market has also contributed to a surge in rubber prices in the domestic market. On February 7, a tonne of SVR 3L rubber was traded at VND76.5 million on the Sai Gon Thuong Tin Commodity Exchange (SACOM-STE), up nearly VND10 million against late January.

The VRA attributed the price hike to impacts from the global market, saying that the world's three leading rubber exporters- Thailand, Indonesia and Malaysia- were dealing with reduced crop yields due to unfavourable weather, leading to a decline in the market.

A disbursement of 17 billion baht ($534 million) from the Thai government and businesses to buy rubber for reserve has also helped push up prices.

Besides an upward trend in global oil prices, rubber demand has also been pushed up thanks to rising car purchases in the US in the wake of a fall in the country's unemployment rate.

According to the latest ANRPC forecast, natural rubber production in major producing countries will reach 10.45 million tonnes this year, up only 3.2 per cent against last year. The increase is lower than last year's 5.7 per cent.

Therefore, the price for natural rubber would be on a continous increase at least until May as Thailand, Indonesia and Malaysia continued to reduce rubber output due to unfavourable weather, ANRPC said.

Source: Daily "Vietnam News", Hanoi; 15 Feb 2012

(Syed Rashid Ali, Karachi, Pakistan)