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Cambodian rubber earnings fall

Following global supply growth and falling prices, Cambodian rubber has decreased in value over the past three months, according to industry experts.

Men Sopheak, deputy director-general of the Chop Rubber Plantation, a major rubber exporter in Cambodia, said yesterday that the price of dried [natural] rubber was at $2,100 per tonne, in contrast to $3,100 per tonne in March.

“It affects our competitiveness and causes lower profit margin because sale revenues decrease while our production costs are high,” Sopheak said.

Reuters reported yesterday that Asian rubber prices were set to fall due to rising supply – Thailand plans to offload stocks later this year – and slowing demand.

Heng Sreng, general director of the Boeung Ket Rubber Plantation Company in Kampong Cham province, confirmed that the local price had dropped compared to March.

“It is a noticeable decrease. It is not so serious yet, however, we should be concerned,” Sreng said. “If the price continues to fall lower than $2,000, it will strongly affect our business.”

Stephen V Evans, secretary-general of the Singapore-based International Rubber Study Group, said in a recent interview that Cambodia is only active in producing and exporting natural rubber.

“In this case the global oversupply position of natural rubber has reduced prices significantly through 2012 and 2013 year to date,” he said. “There is no obvious relief in sight at this time from the perspective of price, but the export picture is much more positive with 37,300 metric tonnes being exported in the first six months of 2013 versus only 23,000 during the same period in 2012.”

The general economic slowdown in Cambodia’s largest rubber market, China, is having a relatively minor impact on China’s total rubber demand, Evans said, citing growing sales of new vehicles.

“In China, total rubber consumption in 2012 grew by eight per cent to around nine million metric tonnes. Activity based on the year to date suggests that there will be similar growth in 2013,” he said.

According to the International Rubber Study Group, a significant volume of rubber consumption in China is exported as rubber end products such as tyres to Europe or North America.

“In North America total rubber consumption in 2012 fell by around six per cent to around 2.9 million metric tonnes. Activity based on the year to date suggests that there will be similar negative growth in 2013,” Evans said.

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