A rubber production line at 175 Company. The export price of Vietnamese rubber is expected to increase to $2,000 per tonne during the next three years. — VNA/VNS Photo Trong Duc

HA NOI (Biz Hub) — Export prices for rubber are expected to recover to US$2,000 per tonne in the next three years, following sharp reductions due to high international rubber surpluses, according to local experts.

The Viet Nam Rubber Association (VRA) said, at present the export price of rubber has stood at $1,840 per tonne, 40 per cent lower than the same period last year and 60 per cent lower against the record high price in February 2011, reported Viet Nam News Agency last week.

The fall in the export price of rubber was due to high inventories of rubber throughout the world, said the association.

According to the International Rubber Study Organisation (IRSG), inventories of natural rubber on the world market are expected to reach 714,000 tonnes this year.

Vietnamese export rubber prices at the end of June and early July were VND36-41 million ($1,700 - $19,500) per tonne, while production costs were VND38 million ($18,000) per tonne, said Tran Ngoc Thuan, general director of Viet Nam Rubber Group (VRG).

However, the export price of Vietnamese rubber is expected to increase to $2,000 per tonne during the next three years because of higher demand on the period of recovering the world economy, Thuan said.

With this price, rubber growers will still have profits of VND3-5 million per tonne, Thuan noted, though they should seek solutions to cut production costs and further increase their profits.

He said the current export price for Vietnamese rubber is not too low, but it is lower than the record high price of some $3,300 per tonne in 2011-12.

Now, farmers still receive profits from growing rubber trees, though the profits are not as high as in the past, Thuan said, so this period might prove to be a good time for farmers to improve the quality of their rubber trees.

Meanwhile, Minister of Agriculture and Rural Development Cao Duc Phat said demand for rubber on the world market has increased, but oversupply has pushed the export price of rubber down. Also, the high inventory of rubber, at present, will fall in the next few years due to the economic recovery throughout the world.

Therefore, industries and sectors should closely follow developments in the world rubber market in the coming years to learn of support for farmers in the remaining development of rubber trees, said Phat.

Also, the domestic rubber industry should review its plan to develop rubber trees to promote the restructuring of the industry and maintain sustainable development in the industry for improving the quality and value of rubber, he said.

At present, the total area of rubber trees in Viet Nam has stood at 900,000 ha, higher than the plan calling for 800,000 ha of rubber trees by 2015, because farmers had spontaneously increased the planting of rubber trees when the export price jumped to a record high in 2011-12.

Yet, when export prices dropped, farmers rushed to cut trees so they might grow other types of industrial crops.

Regarding the market, Viet Nam has exported its rubber products to 70 countries and territories, including China, its largest export market of local rubber.

For the long term, ministry officials urge, the domestic rubber industry should increase trade promotion activities, expand export markets and find new export markets to reduce dependence upon the Chinese market.

The industry should also diversify export products from the rubber from trees, the ministry said.

Tran Ngoc Thuan, general director of the VRG, said the group has mainly exported latex and developed products related to rubber trees, including processing of rubber wood and products made from rubber, such as tube and tire, shoe soles, gloves and mattresses.

Viet Nam gained a year-on-year increase of 20 per cent in export value of rubber to $1 billion last year.

In the first seven months of this year the country exported 451,000 tonnes of rubber, valued at $828 million, a drop of 10 percent in volume and 32 percent in value. — VNS