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Vietnam’s rubber industry: overview and future forecast

Vietnam’s rubber industry: overview and future forecast

Monday 21, 03 2022
In 2021, despite many difficulties due to the impact of the Covid-19 pandemic, rubber companies in Vietnam still achieved good business results as demand increased and export prices also reached the highest level in 10 years. It is forecasted that in 2022, rubber production, processing and export will continue to grow.

Rubber export value recorded 10-year high

Vietnam Rubber Group has just summarized its business performance for 2021. The group's total consolidated revenue reached over 28.5 trillion VND, approximately 6% higher than the plan. Its pre-tax profit reached over 6.1 trillion VND, exceeding 7% of the plan while profit after tax was estimated at over 5.1 trillion VND, exceeding 10% of the plan.

Vietnam Rubber Group

In particular, rubber exports in 2021 recorded a very important milestone, reaching 3 billion USD, which is the highest level in 10 years’ time. Specifically, in 2011, due to the record high price of rubber exports, rubber exports surpassed the 3 billion USD level for the first time, reaching more than 3.2 billion USD.

After exactly 10 years, thanks to the continuous increase in rubber prices, despite the complicated global epidemic, and although Vietnam's rubber exports only increased by 11.7% compared to 2020, the export turnover of rubber was estimated at 3.24 billion USD, up 36.2% compared to 2020.

As the largest unit of Vietnam Rubber Group, in 2021, Dong Nai Rubber Corporation exploited 26.6 thousand tons of rubber, exceeding 4.5% of the plan. The company’s revenue reached 2,127 billion VND, of which revenue from rubber was 1,570 billion VND and total profit was more than 420 billion VND.

Dong Nai Rubber Corporation

In 2021, the average price of rubber increased by about 10 million VND per ton compared to 2020. This is also a favorable condition for Dong Nai Rubber Corporation to improve exploitation efficiency.

Positive outlook in 2022

According to experts' forecasts, the world's demand for natural rubber will increase in the coming time. The reopening of international borders of some countries and the resumption of economic activities are believed to significantly contribute to the recovery of consumer demand for rubber in 2022. Therefore, the outlook for Vietnam’s rubber industry in 2022 will still be very bright, and selling prices will continue to stay high.

The long-term outlook is relatively good as in the next few years, the world rubber market may enter a new price increase cycle due to the decreasing supply of rubber. This is an opportunity for Vietnam's rubber exports to continue to benefit.

In addition, high export prices is due to the fact that the quality of rubber plantations in Vietnam has been improved, meeting international standards. Many rubber farms have applied advanced science and technology to production. The Vietnam Rubber Association is promoting the granting of the Vietnam Rubber certification. This is one of the necessary jobs besides improving the quality of rubber planting and processing in order to build a brand name for Vietnamese rubber.

Recommendation rubber stocks in Vietnam

The rubber industry is currently one of the top 10 most potential industries in Vietnam. It contributes significantly to the economic growth. Rubber stocks are currently quite viable for investment because the export market is still ongoing despite the pandemic having a great impact on the industry.

The rubber industry

Investing in this kind of stock is better at this time because the stock price is still quite low, when speculative hoarding for a long time can help investors earn huge profits. However, potential risks when investing in rubber stocks during this time may also occur as Vietnam's rubber export is in fierce competition with major markets such as Thailand and China.

Source: Dongnainews, Jpcmedia

Compiled by VietnamCredit

 

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