A worker harvests rubber latex in Van Yen district in the northern province of Yen Bai. (Photo: VNA) Hanoi (VNS/VNA) - Rubber producers reported poor second-quarter businessresults due to decreasing rubber prices, eyeing industrial zone development.
Sincethe beginning of this year to mid-April, natural rubber prices have droppedsharply, then maintained at low price areas so far.
Inthe second quarter of 2020, the price of world natural rubber on the TokyoCommodities Exchange fluctuated between 130-145 Japanese yen (1.31-1.35 USD)per kilo. While in the same period of 2019, the product was traded at175-240 Japanese yen per kilo.
Theprices of natural rubber are much affected by the prices of artificial rubber,which is produced from petrochemical refining, thus its prices are closelymimicked with oil prices. When oil prices fall, artificial rubber is producedat lower prices and vice versa.
Oilprices have shown signs of recovery since its low peak in mid-April 2020, butdue to weak demand, US crude West Texas Intermediate (WTI) and Brent Crude areonly traded at around 40-43 USD per barrel.
Ifthe global economy continues to operate under current capacity as influenced bythe COVID-19 pandemic, it will be difficult for oil demand to recover aspreviously.
TayNinh Rubber JSC (TRC) reported revenue of 61.5 billion VND in Q2, post-taxprofit of 16.7 billion VND, up 1.3 percent and down 43.36 percent year-on-year,respectively.
Inthe first six months, the company earned total revenue of 113.7 billion VND,post-tax profit of 37 billion VND, down by 13.53 percent and up by 10.81 percentcompared to the first six months of 2019.
Inthe first quarter, TRC recorded a surge in revenue from the liquidation ofrubber trees, while in the second quarter there was no revenue from thisactivity.
Confrontingfalling rubber prices, companies are shifting from rubber plantations todevelop industrial zones as they eye capturing opportunities from globalvalue chains.
ThePhuoc Hoa Rubber Company has got the Prime Minister’s approval to convert its345ha of rubber land in Tan Uyen district, Binh Duong province, to developthe Nam Tan Uyen Industrial Zone’s expansion project.
At the annual shareholders’ meeting in 2019, Phuoc Hoa also announced its planto transfer 691ha to Vietnam Singapore Industrial Park Company Ltd (VSIP)to develop VSIP No 3.
Dong Nai Rubber Corporation recently asked the provincial People’s Committee’spermission for the conversion of land use purpose of 18,000 out of37,000ha of rubber land the company was currently managing.
Under the company’s proposal, 5,000ha of land would be used to developindustrial zones and clusters in Thong Nhat, Long Khanh, Cam My and Long Thanhdistricts. The rest would be used for developing high-tech agriculture andurban areas.
VietnamRubber Group (VRG), which manages around 400,000ha of rubber land, hasinvested in 12 companies which operate 16 industrial zones with a total area ofmore than 6,500ha.
Accordingto BIDV Securities Company, the industrial property market would be spurredfrom next year by the approval of free trade agreements (FTAs), especially theEuropean Union – Vietnam FTA (EVFTA) – the trade deal with commitments aboutimproving institutions and business climate to make Vietnam moreattractive to investors.
The COVID-19 pandemic was accelerating the transformation of global valuechains, during which Vietnam could emerge as a centre for investment inflow,the company said./.
VNA
