Interview with Mr. Trần Thanh Phụng, Deputy General Director of the Vietnam Rubber Group (VRG)
Rubber Consumption in 2021: Challenges and Achievements
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Q: How would you assess the rubber consumption performance of VRG member units in 2021, given the complicated Covid-19 situation?
Mr. Trần Thanh Phụng:
The global rubber market in 2021 operated under the influence of the third and fourth waves of Covid-19, which affected logistics and trade. The container shortage and high freight costs created major challenges for exports and increased pressure on rubber prices.
However, as countries gradually adapted to the “new normal,” production recovered while global supply grew more slowly due to pandemic disruptions, leaf disease, and unfavorable weather in key producing nations. This kept supply and demand relatively balanced.
Meanwhile, oil prices fluctuated between USD 60–80 per barrel, providing additional price support for natural rubber. Although rubber prices moved in large waves — with steep declines in September and October — the average annual price increased by about 27% compared with 2020.
Under these market conditions, VRG member companies actively followed the Group’s principle: produce what can be sold, sell what is produced. The Group leadership improved weekly market forecasting to adjust flexible floor pricesand manage inventories efficiently.
As a result, VRG’s rubber consumption exceeded 450,000 tons in 2021, with nearly 50% sold under long-term contracts, and the average selling price rose 27% year-on-year. The Group surpassed its 2021 targets in both volume and revenue.
Outlook for the Rubber Market in 2022 and Beyond
Q: How do you assess the rubber market in 2022 and the coming years?
Mr. Trần Thanh Phụng:
Today’s rubber trading differs from the traditional period when supply and demand were the main drivers. Now, prices are also shaped by unpredictable external factors — including the Covid-19 pandemic, geopolitical tensions, investment capital flows, and exchange rate fluctuations (USD, RMB, JPY).
Nevertheless, based on two key fundamentals — supply-demand balance and crude oil prices — both will support rubber prices in 2022 and beyond.
According to the Association of Natural Rubber Producing Countries (ANRPC), the global natural rubber market is entering a long-term supply deficit, expected to persist until 2031 as demand outpaces supply. The shortage may widen from 2023 through 2028, driven by limited new planting areas and slower tree maturity expansion.
In 2022, although global mature rubber area may increase by about 250,000 hectares, the additional output will likely be absorbed by strong global demand.
Oil Prices Support Natural Rubber Prices
Crude oil prices have a direct correlation with natural rubber, as synthetic rubber is derived from petroleum.
When oil trades above USD 60/barrel, it provides a floor for natural rubber prices, preventing them from falling to historical lows. Currently, oil prices are hovering around USD 80/barrel, and forecasts suggest this level may be maintained through 2022.
However, a stronger U.S. dollar could cap further gains, and the uncertain pandemic situation remains a risk factor. If Covid-19 is effectively controlled and the post-pandemic economy continues to recover, the rubber market from 2022 onward looks relatively stable and even optimistic, especially as supply shortages emerge from 2023.
Strategies for VRG Member Companies in 2022
Q: What should VRG member units do to respond flexibly to the 2022 rubber market?
Mr. Trần Thanh Phụng:
The recent crisis of oversupply and low prices has taught the rubber industry valuable lessons:
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Recognize cyclical dynamics.
Market fluctuations are cyclical. Industry stakeholders must coordinate actions to mitigate volatility and ensure sustainable growth. Key producing countries are pursuing such coordinated measures, and exporters should actively participate. -
Enhance productivity and quality.
Technological innovation and international certifications such as ISO, FSC, and PEFC must be maintained and expanded across member companies. -
Strengthen buyer relationships.
Building long-term partnerships with buyers based on mutual trust and shared benefit is vital for market stability. -
Improve market intelligence.
Regular information gathering, analysis, and forecasting play a critical role in business management. Companies that can anticipate market movements will make proactive and informed decisions, reducing risks.
“If global demand continues to recover, supply remains tight, and the post-Covid economy stabilizes, the rubber market from 2022 onward will be favorable and resilient.”
— Mr. Trần Thanh Phụng, Deputy General Director, VRG