According to the Agency of Foreign Trade (under the Ministry of Industry and Trade), rubber export prices will soar in 2022, especially in the last six months of the year. The main reason is the global demand for raw materials is increasing. Meanwhile, the world output of rubber is lessening due to many factors. Of which, the most impacting one is climate change which causes the rubber cultivating areas in the world to decrease, contradicting the increased demand of industrial producing countries. Therefore, Vietnam's rubber industry can witness increased export prices in 2022.
The Vietnam Rubber Association (VRA) also forecast that in the period of 2022-2024, the world rubber market will probably enter a fairly strong price increase cycle due to the decreasing supply. Thus, rubber exports of Vietnam can continue to benefit in price. The total value of rubber export turnover in 2022 may exceed 3.5 billion USD.
One of the supporting factors for Vietnam's rubber exports in 2022 is that, up to now, 55,000ha of rubber forests have been certified VFCS/PEFC. It is expected that the certified rubber forest area will reach 100,000 ha by the first quarter of 2022. With this existing certified area, 85,000 tons of natural rubber and 300,000 tons of certified sustainable rubberwood will be harvested and put into production and trade.
In 2021, Vietnam’s rubber export benefited from the increased price of rubber worldwide. The Agency of Foreign Trade said that in December 2021, the average export price of rubber reached 1,720 USD/ton, up 1.6% compared to November 2021 and up 7.9% over the same period in 2020. With 270,000 tons of rubber exported in the last month of 2021, up 19.4% over the same period in the year prior, the rubber industry brought in a turnover of 464 million USD, up 28.8% over the same period in 2020, bringing the total value of rubber export turnover for the whole year 2021 to over 3.3 billion USD. The export volume only increased by 12.9%, equivalent to 1.97 million tons, but increased by 39% in price compared to the same period in 2020.
In the first 11 months of 2021, Vietnam's rubber exports to the European Union (EU) will reach about 100 thousand tons, equivalent to 175 million USD, up 33.7% in volume and 72.6% in value compared to the same period in 2020.
The EU is one of the largest export markets for Vietnam's agricultural products. The EU-Vietnam Free Trade Agreement (EVFTA) is considered an opportunity for Vietnamese agricultural products, especially the rubber industry, to connect deeply into a large market with high selling prices.
Accordingly, with the EVFTA, synthetic rubber and its derivatives will not inherit new advantages because the tax rate is already 0%. However, rubber hoses and tires are exempt from tax immediately from the previous 3% - 4.5% rate. Rubber conveyor belts will enjoy a discount from the original 6.5% over five years. That is the driving force behind the export of rubber and rubber products.
There is a great consumption demand for high-quality rubber and rubber products in the EU market. Vietnam's SVR CV, SVR 10, and SVR 20 rubber can suffice such demand. Those items will see continued growth momentum in the coming years.
However, the legality and sustainability requirements in the EU market for products are getting stricter in both market and regulation aspects. Vietnam's rubber industry would aim for sustainable rubber production in accordance with FSC standards to meet such requirements.
Although Vietnam is the 4th 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 to expand export markets.
To ensure the quality of rubber, the representative of the Vietnam Rubber Association said that it is promoting the granting of the “Vietnam Rubber” certification mark. That is one of the necessary tasks besides improving the quality of rubber planting and processing to build a brand name for Vietnamese rubber.
Compiled by VietnamCredit
