Logo of Phnom Penh Post newspaper Phnom Penh Post - Rubber exporter turns to Europe

Rubber exporter turns to Europe

Rubber exporter turns to Europe

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A worker extracts rubber from a tree on a plantation in Kampong Cham province last month.

We received lots of demand from European countries and even the US

Cambodia's largest rubber plantation has begun exporting to European buyers, obtaining prices of more than double those from a year ago, according to Chub Rubber Plantation President Mak Kim Hong.

Its rubber fetched about US$5,400 per tonne in Ho Chi Minh City this month, compared with $2,500 a tonne a year ago, he said yesterday.

“We have never had the price of rubber increase this much - not in a decade,” he said.

Thailand – the world’s largest rubber producer – has been hit by flooding in 10 of its southern provinces, killing 47 people, according to a statement from Thailand’s Department of Disaster Prevention and Mitigation.

Some 7,948 hectares of rubber plantations have been damaged during the recent floods, the statement said.

“Flooding in the south of Thailand damaged rubber plantations, further tightening the nation’s supplies, which are on a seasonal decline,” Kazuhiko Saito, an analyst at broker Fujitomi Company in Tokyo said yesterday.

Mak Kim Hong said global supply was declining, partly due to Thailand’s flooding, providing an opportunity for Cambodia’s exports.

“[The floods have lead] to a shortage of rubber supply in the global market,” said Mak Kim Hong.

Located in Kampong Cham province, Chub plantation rubber received a certification at international quality level in December 2010, which Mak Kim Hong has said allows it to export at higher prices and to more demanding customers.

It has since begun selling some of its product to a Singaporean company, which, in turn, supplies the European market.

“This year, we received lots of demand from European countries and even the United States, while our existing markets, China and Vietnam, have not come to buy from us,” he said yesterday.

He claimed Chinese and Vietnamese buyers currently have excess stock of the commodity, as they had been unable to sell in Japan following last month’s earthquake.

However, he expects the company’s traditional buyers to return with orders after the Khmer New Year celebrations later this month.

Mak Kim Hong added he did not expect prices to remain at current peaks over the coming months.

“I don’t think rubber will fall to below $4,000 a tonne. I expect prices between $4,500 to $5,500,” he said.

Mak Kim Hong is also President of the Cambodia Rubber Association.

The September-delivery contract climbed as much as 5.1 percent to ¥466.8 a kilogramme (US$5,532 a tonne), the highest level since March 7, in Tokyo trading yesterday.

Ly Phalla, director general of the Ministry of Agriculture’s Rubber Department, could not be reached yesterday.

ADDITIONAL REPORTING BY BLOOMBERG

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