HANOI: Vietnam’s natural rubber industry is facing mounting challenges, with listed rubber stocks lagging behind the broader market as companies grapple with falling global rubber prices and a slowdown in land conversion projects – two major drivers of their earnings.
As pressures on both revenue and asset strategy intensify, investors are finding little momentum in a sector traditionally seen as a blend of agriculture and industrial real estate.
Since late February, natural rubber prices have dropped sharply by over 17%, sliding from 375 yen per kg to around 310.7 per kg on June 30.
This steep decline is largely attributed to aggressive price competition among Chinese automakers.
In an effort to offload inventory and stimulate demand amid weak consumer sentiment, many manufacturers have implemented large-scale discount campaigns across both electric and internal combustion engine vehicle models.
This wave of price cuts has driven down tyre prices globally, affecting demand for natural rubber – the primary raw material in tyre production.
Notably, the tyre industry accounts for about 70% of global natural rubber consumption.
As a result, rubber-producing countries, including Vietnam, are seeing export prices fall just as seasonal supply is beginning to rise.
While Vietnam’s rubber trees enter peak harvesting season between June and October, the expected increase in output could exert additional pressure on prices.
Market analysts warn that unless global demand recovers significantly, the domestic sector could face a further erosion of margins in the second half of the year.
At a recent general meeting, Truong Minh Trung, deputy CEO of Vietnam Rubber Group, acknowledged the volatility but maintained cautious optimism.
He pointed out that in the first months of 2025, rubber prices averaged 50 million dong per tonne, a notable improvement compared to the 2024 average of 43 million dong.
“We forecast that average prices this year may settle between 45 million dong to 47 million dong per tonne, likely exceeding last year’s levels,” Trung said.
However, not all market observers share that outlook.
A report by MB Securities offers a more conservative forecast, estimating that rubber prices will decline to 44.6 million dong in 2026 and 42.4 million dong in 2027.
The anticipated downward trend reflects expectations of softer global demand combined with rising output across key supplier markets. — Viet Nam News/ANN
