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Weak int’l market punctures Jan-Aug rubber exports

Content image - Phnom Penh Post
Milky latex oozes from the bark of a rubber tree that has been tapped in the traditional way, by incision, in Chamkar Leu district, Kampong Cham province on February 10. Hong Menea

Weak int’l market punctures Jan-Aug rubber exports

Cambodia exported $304.385 million worth of rubber latex and wood in the first eight months of 2022, down by 6.7 per cent from the $326.339 million posted in the same period last year, according to the General Directorate of Rubber (GDR) under the Ministry of Agriculture, Forestry and Fisheries.

Rubber latex accounted for $301.294 million, weighing in at 194,014 tonnes, up 1,453 tonnes year-on-year, while wood represented $3.092 million, totalling 20,629 cubic metres.

GDR head Him Aun said Covid-19-linked and other setbacks to global economic growth, the Sino-US geopolitical tussle and Ukraine conflict have led to rubber’s recent rather weak performance on the international market.

However, he argued that the market would likely recover as travel creeps back to pre-Covid levels on the back of a transition to the endemicity of the novel coronavirus, and as other ongoing crises wane.

“Although producers of natural rubber are not in a strong market position at the moment, I expect a recovery soon, fuelled especially by procurements from local car tyre factories that are set to go online in the near future,” he said.

However, Men Sopheak, CEO of rubber grower and exporter Sopheak Nika Investment Agro-Industrial Plants Co Ltd, remarked that the recent establishment of domestic car tyre factories has yet to translate into a significant uptick in demand for Cambodian-made rubber, and that producers are almost entirely dependent on international buyers.

Worse still, he said, prices for natural rubber on the international market are hovering at just about $1,600, and the global market has been quite weak over the past two years. Moreover, rising labour costs, a shortage of workers and other major challenges have been troubling Cambodian investors, he added.

“Market issues and high labour costs are preventing new cultivation and investment in rubber production at the moment,” he said.

On the other hand, Sopheak voiced hope that once the global economy is in better shape, production at the local tyre factories will be running more smoothly, and the enterprises will gradually order more local rubber.

When asked, Sopheak confirmed that he had recently met with the management of one such factory in Svay Rieng province’s Bavet town – near the border with Vietnam.

The GDR reports that as of 2021, Cambodia had 404,044ha dedicated to rubber production, with 310,193ha or 76.77 per cent mature and tapped for latex, which yielded 368,000 tonnes last year, or an average of just below 1,200kg per hectare. According to Aun, the area under rubber cultivation has not seen significant changes in the past “two or three years”.

The average price of the milky white sap – extracted from the Hevea brasiliensis tree native to Brazil – over the January-August period was $1,553 per tonne, down by $119 or 7.1 per cent year-on-year.

Cambodian rubber latex and wood exports topped $611.77 million in 2021, climbing up from $482 million a year earlier.

Broken down by category, 366,300 tonnes of natural rubber latex – or over 99 per cent of total production last year – accounted for $610.26 million, and 454 cubic metres of rubber wood clocked in at $1.52 million, the directorate reported.

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