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Rubber prices on a bounce

Sok Chan / Khmer Times Share:
Farmers harvesting latex rubber at a plantation in Kampong Cham province. KT/Chor Sokunthea

The price of natural dry rubber has been promising in the last few months, after being hit hard for years, with exports on the rise.

It now costs $1,510 a tonne for the free-on-board (FOB) at Ho Chi Minh port in Vietnam while it was $1,300 per tonne or less than that the previous year, said Pol Sopha, general-director of the rubber department at Cambodia’s Ministry of Agriculture. He said that in the first eight months of this year, Cambodia exports came to more than 140,000 tonnes of dry rubber.

There is no barrier to exporting rubber products and price of rubber looked promising by the end of July and August and is now in fact increasing despite the COVID-19 pandemic, said Sopha. Tariffs only come into effect on goods costing more than $1,400 a tonne.

“We export only raw rubber because Cambodia does not have any manufacturing to process it. At this price, family-owned rubber plantations make a profit, but the commercial plantation gain only slightly,” he added. Commercial plantations have higher overheads such as more workers. At present exports of rubber from Cambodia have been increasing because over the past five years many hectares of the trees were planted, said Lim Heng, chairman of Hean Mean Investment Co and vice-president of An Mady Group. He said the exports have been increasing in the last three years and the price has risen a lot.

“Cambodia produces only dry rubber and we see that exports are up and the price has also improved over the last three months. We get more than $1,400 for FOB per tonne,” said Heng. “We mostly sell to Vietnam,” he added. “We see it as a break-even price at this level,” he added.

Thailand is also witnessing the prospects for natural rubber prices rising, boosted by a sharp uptick in demand for protective rubber gloves because of the pandemic and limited supply in the world market, according to the Bangkok Post.

The Bangkok Post quoted Luckchai Kittipol, honorary president of the Thai Rubber Association, as saying that he is more upbeat about the outlook for rubber after the price of smoked rubber sheet grade 3 reached about $1.90 a kilogramme (kg) for the first time in more than a decade on Sept 1.

Prices rose from a little under $1.90 per kg on Aug 31 and about $1.30 earlier in the year. In the past, Thailand’s rubber production focused largely on rubber sheet, which is used as a raw material to make automotive tyres. Lately there has been a surge in demand for protective rubber gloves.

Thailand is the world’s largest producer of natural rubber, at 4.8 million tonnes last year, with exports accounting for almost 4 million tonnes. Thailand ranks fourth for exports of rubber products and processed rubber, trailing China, Germany and the US. Thailand’s exports totalled $11.2 billion last year, up 2 percent.

According to Luckchai, Thailand’s natural rubber production is estimated to remain at 4.5 million tonnes this year, with exports accounting for 3.8-3.9 million tonnes.

The rubber products are processed into 1,000 by-products, with tyres for vehicles (60 to 65 percent), accounting for most uses and gloves in the health sector, which need special technology to produce and also provide high added-value, increasing their share, said Sopha.

“The government has encouraged investors to process the raw rubber into finished products. However, so far there are no investors interested in putting money into rubber plantations. Cambodia exports the rubber to Vietnam, China, Malaysia and Singapore among other countries,” he added.

Rubber plantations now account for 404,701 hectares across the country. Harvested rubber plantations make up 250,107 hectares. Rubber production reached 28,163 tonnes in August this year, up 2 percent compared with August 2019, according to a report from Ministry of Agriculture. In August alone, exports were 25,953 tonnes, an increase of about 7 percent compared with August 2019.

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