Falling NR prices hit Vietnam’s Rubber companies

  • 2020-07-24 12:00:00
  • Reporter

Vietnam’s rubber plantation industry has been impacted by the declining global prices of the commodity. Lower oil prices caused synthetic rubber prices to fall, which had an effect on natural rubber (NR) prices.

For the January to June 2020 period, Phuoc Hoa Rubber JSC (PHR) announced revenue of VND 256.88 billion ($11 million), down 26.5% compared to the year-ago period, while its post-tax profit of VND395 billion ($17.04 million) was down by 250.6% year-on-year.

Tay Ninh Rubber JSC (TRC) said revenue rose 1.3% at VND61.5 billion ($2.65 million) during the first quarter, while post-tax profit was down 23.3% at VND16.7 billion ($720,000). During the first six months of 2020, the company reported revenue of VND113.7 billion ($4.9 million), down by 13.53%, while post-tax profit rose 10.81% to VND37 billion ($1.59 million), compared to the same period in 2019. The first quarter of 2020 was marked by a rise in revenue from the liquidation of rubber trees.

According to a report in Saigon Online, some companies in Vietnam are making the change from cultivating rubber plantations to developing industrial zones, as they attempt to capture opportunities in new global value chains.

Official government approval has been awarded to the Phuoc Hoa Rubber Company to convert its 345 hectares of land under rubber cultivation in the Tan Uyen District, Binh Duong Province, in order to develop the Nam Tan Uyen Industrial Zone’s expansion project. At its annual shareholders’ meeting last year, the company also announced its plan to transfer 691 hectares to the Vietnam Singapore Industrial Park Company Ltd (VSIP) to develop VSIP No 3.

Dong Nai Rubber Corporation recently requested government permission for the conversion of land use purpose of 18,000 out of 37,000 hectares of land under rubber cultivation that the company has been managing. Under the company’s proposal, 5,000 hectares of land are to be used to develop industrial zones and clusters in the Thong Nhat, Long Khanh, Cam My and Long Thanh districts. The rest will be used to develop high-tech agriculture and urban areas.

Vietnam Rubber Group (VRG), which manages around 400,000 hectares of rubber plantations, has invested in 12 companies which operate 16 industrial zones with a total area of over 6,500 hectares.

The approval of free trade agreements (FTAs) next year, especially with the European Union – Vietnam FTA (EVFTA) – involve commitments about improving institutions and business climate to make the country more attractive to investors. The global coronavirus pandemic which caused great disruption to global supply chains and has created an opportunity for Vietnam, which is emerging as an alternative to China as a production base for companies from across the world.

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