Đà Nẵng Rubber JSC (DRC)'s tyre factory. Đà Nẵng Rubber Joint Stock Company (DRC) achieved revenue of VNĐ5 trillion and pre-tax profit of VNĐ386 billion in 2022, an increase of 12 per cent and 6 per cent, respectively, compared to 2021. — Photo drc.com.vn

HÀ NỘI - The rubber industry is poised to reap the rewards of China's reopening following the end of the country's zero-COVID policy, as the Asian nation is the largest import market for rubber from Việt Nam.

According to Agricultural Securities Company (Agriseco), China is the world's largest natural rubber import market, with a consumption market share of more than 43 per cent. It is also the largest rubber importer of Việt Nam, accounting for nearly 80 per cent in 2022.

The reopening of China on January 8, 2023, will boost rubber demand for the production of tubes and tyres. Rubber manufacturing and exporting enterprises will benefit from the reopening and expect positive business results in 2023.

China's increase in rubber imports for production will be an important condition for prices to rise again after the last price reduction period.

According to information from the Ministry of Agriculture and Rural Development, Việt Nam currently ranks third globally in rubber export value and is present in more than 80 countries and territories, particularly China, the US, the EU, South Korea and India.

In 2022, the total export turnover of the rubber industry was estimated at US$10.3 billion, up 8.5 per cent compared to 2021. Natural rubber exports were estimated at 2.14 million tonnes, worth $3.31 billion, up 9.6 per cent in volume, but only 1.1 per cent in value, because the average export price was $1,547 per tonne, down 7.8 per compared to 2021.

The Việt Nam Rubber Association said the recovery of global rubber consumption had boosted rubber export businesses. However, the US dollar exchange rate increased, while rubber latex prices decreased in the last months of 2022.

SSI Research forecast that China would restore tyre production after gradually easing social distancing, thereby increasing demand for natural rubber and the price of natural rubber in the market. However, with the downtrend of oil prices, natural rubber prices may increase by 1-5 per cent in 2023.

On the stock market, rubber stocks saw positive developments in the first month of 2023; price increases ranged from 4.2 to 15.1 per cent.

In the natural rubber group, enterprises gaining attention from investors are Việt Nam Rubber Group (GVR), Phước Hoà Rubber Joint Stock Company (PHR), and Đồng Phú Rubber Joint Stock Company (DPR).

In the group of rubber tyres, the notable companies are Đà Nẵng Rubber Joint Stock Company (DRC) and Sao Vàng Rubber Joint Stock Company (SRC).

In 2022, GVR was estimated to achieve total consolidated revenue of VNĐ28.6 trillion ($1.2 million), a consolidated pre-tax profit of VNĐ5.2 trillion exceeding 1.1 per cent and 6.1 per cent of the plan, respectively.

According to Lê Thanh Hưng, General Director of GVR, the group will increase the rubber planting area, production and consumption, and develop the wood processing and rubber industry to exploit the value chain effectively.

VRG will promote industrial rubber products to limit  the export of raw materials, meet domestic consumption demand, and export products such as car tyres and medical gloves.

In 2022, Đồng Phú Rubber Joint Stock Company (DPR) achieved revenue of VNĐ1.2 trillion, up slightly from VNĐ1.2 trillion in 2021, and profit after tax of VNĐ278 billion, down 41 per cent. The company has not announced its business plan for 2023.

DPR was approved by the State Securities Commission to purchase all shares of Đồng Phú-Đắk Nông Rubber Joint Stock Company to acquire this business under the restructuring plan of GVR.

For Phước Hoà Rubber Joint Stock Company (PHR), revenue in 2022 decreased by 12 per cent compared to 2021, recording VNĐ1.7 trillion, of which revenue of semi-finished products was VNĐ1.5 trillion, down nearly 14 per cent. However, profit after tax increased by 86 per cent, reaching more than VNĐ886 billion.

Đà Nẵng Rubber Joint Stock Company (DRC) recorded revenue of VNĐ5 trillion and pre-tax profit of VNĐ386 billion in 2022, an increase of 12 per cent and 6 per cent, respectively, compared to 2021. The company set a revenue target of 2023 to reach VNĐ5.5 trillion, growing more than 10 per cent.

In the first quarter of 2023, DRC aims for turnover of VNĐ1.1 trillion and a before-tax profit of VNĐ70 billion, lower than the performance of the same period last year.