Prospects For Rubber Industry Are Pessimistic

Prospects for natural rubber in 2016 are poor, with rubber prices are expected to remain at low levels.

The World Bank (WB) forecasts the price of RSS3 rubber will recover only about 3% of the average level of $1.54/ kg in 2016 due to dramatic drop in supplies. However, a slowdown in demand from China, together with lower oil prices will make the rubber prices difficult to have a good recovery.

Prospects for Vietnam rubber in 2016 are not optimistic

International Tripartite Rubber Council (ITRC) will likely continue to use measures to regulate supply because rubber prices are currently lower than 23% compared to the figure at the end of 2014.

Currently, Vietnam is a strategic partner of the ITRC and is considering becoming an official member of this association. The participation of Vietnam will increase the proportion of the world's supply of ITRC from 67% to 76%, and thereby enhancing the ability to control the supply of the ITRC.

The decline in supply in major producing countries will support the prices of rubber exported in the short term. Besides, Vietnam is currently considering measures to regulate the supply of the ITRC. If these measures are applied, they can have a two-way impact. Rubber prices will be improved thanks to the improvement in the impact of the ITRC. The export volumes may be trapped under the objective measures of IRTC.

Demand for tire production in China in 2016 is expected to slow down significantly, following the trend of automobile production output of China in 2015.

In the long term, the prospects for Vietnam's rubber industry are considered less optimistic due to the slowdown in the demand for natural rubber from China which is expected to maintain in the long term. Supplies from major producing countries will return to a high level when weather is more favorable, supply control policies are removed, and the rubber supplies in the country remain at high levels in the next few years.

Hung Nguyen

Source: taichinhplus.vn