Vietnam's Rubber to Join Forward Market

Rubber exporters in the Vietnam Rubber Association (VTA) want to join international forward markets with the help from the Technological and Commercial Joint Stock Bank (Techcombank) to hedge against risks in export.

 

At a seminar on international forward rubber markets held on March 30 by VRA and Techcombank in Ho Chi Minh city, rubber exporters were briefed about some famous international rubber markets such as TOCOM (Tokyo Commodity Exchange) in Japan and SICOM (Singapore Commodity Exchange) in Singapore.

 

Nguyen Huong Lan, deputy director of Techcombank’s Treasury Department, said that trading natural rubber on TOCOM and SICOM had been tested since last May.

 

Since then, the bank has attracted some rubber exporters and importers mainly through TOCOM.

 

However, the number of rubber forward transactions is minimal. So more than 50 rubber exporters in VRA, the majority of Vietnam’s rubber exporters, are potential customers of Techcombank.

 

VRA’s general secretary Vu Thi Thuy Hoa said that natural rubber exporters did not join the forward market last year because there was no law permitting them to do so. However, the government has just promulgated regulations guiding the implementation of the Trade Law including regulations for joining international forward markets.

 

Pham Thanh Duoc, head of Dau Tieng Rubber Co’s export department, said that the current method of exporting rubber entails sellers and buyers fixing prices in contracts based on TOCOM, SICOM and rubber prices in Malaysia.

 

“If rubber prices in the world, as well as the local market, are higher than those in the contracts, enterprises will face risks of selling the commodities at low prices,” Duoc said.

 

Vietnam is expected to rake in US$261 million from exporting 162,000 tons of rubber products in the first quarter of this year, up 50.9 per cent on year in value and 32.7 per cent in volume, the Government Statistics Office (GSO) reveals.

 

Soaring export prices of Vietnamese rubber products are mostly attributed to the significant increase in export value, said VRA, explaining that high demand for latex is the major reason pushing the prices up.

 

Domestic and export rubber prices have increased sharply over the past week and continued to go up by US$60-100 to US$2,020-2,050 a ton.