The global rubber market has experienced a significant downturn in rubber prices at the Tokyo Commodity Exchange and the Shanghai Commodity Exchange. However, in tandem with the international price decline, domestic natural rubber latex prices have seen a considerable increase. This raises questions about the fluctuations related to supply and demand for rubber products in the domestic market.
Decline in the Rubber Market
On October 20, 2023, the rubber market witnessed substantial volatility with rubber prices plummeting simultaneously at the Tokyo Commodity Exchange and the Shanghai Commodity Exchange.
At the Tokyo Commodity Exchange, rubber futures for February 2024 recorded a sharp decline at 11:30 AM, with a 5.9 yen decrease. Rubber prices dropped by an equivalent of 2.22%, reaching 260.2 JPY/kg, a notable price level for the international market.
Not only in Tokyo but also in Shanghai, rubber prices experienced a significant decline. Rubber futures for November 2023 on the Shanghai Exchange fell to 190 CNY/ton, equivalent to a 1.43% decrease. With prices reaching 13,140 CNY/ton, the rubber market is currently going through a rather turbulent period.
Factors Affecting Rubber Prices
The peak rubber production season, typically from mid-September to mid-January each year, usually results in an abundance of global supply. However, major producers such as Thailand and Indonesia are facing reduced production during this period. The reduced output from these key producers can significantly impact the overall supply in the market.
The Thai Meteorological Department has issued warnings about severe weather conditions, including strong winds, heavy rains, and the risk of floods that could potentially affect rubber-producing regions in Thailand. These factors have the potential to disrupt production and transportation, impacting the supply.
Significant Increase in Domestic Rubber Material Prices
In the context of the declining global natural rubber prices, domestic raw rubber material prices have surged. According to a report from the Import-Export Department (Ministry of Industry and Trade), in September 2023, the prices of raw rubber materials nationwide saw an increase compared to the previous month. The purchase price of raw rubber material in Binh Phuoc ranged from 265-285 VND/kg, increasing by 10 VND/kg compared to the end of August 2023. In Dong Nai, prices ranged from 255-265 VND/kg, increasing by 10 VND/kg. In various rubber material regions, prices have also seen a slight increase compared to the previous month.
Rubber companies have also adjusted domestic raw rubber material prices upward. For instance, Phuoc Hoa Rubber Company reported a 20 VND/kg increase, pushing the purchase price to 293-295 VND/kg. At Phu Rieng Rubber Company, prices ranged from 265-285 VND/kg, increasing by 15 VND/kg compared to the end of August 2023. Ba Ria Rubber Company has also adjusted the price of domestic raw rubber material to 265-275 VND/kg, an increase of 19 VND/kg compared to the end of August 2023.
In the midst of the fluctuations in the rubber market, the increase in domestic raw rubber material prices may be a positive signal for the Vietnamese rubber industry. However, careful monitoring of the factors affecting prices and supply in the future is necessary to gain a better understanding of the situation and to provide suitable solutions in this industry.
✍Source: VOH Online