Vietnam 2011 rubber exports to dip on local demand

* 2011 rubber exports to dip as domestic demand rises

* No plans to boost 2010 exports despite good prices

HO CHI MINH CITY (Reuters) - Vietnam’s natural rubber exports next year are forecast to ease slightly to 770,000 tonnes as domestic manufacturers will need more rubber latex to feed  production, an industry official said on Monday.

Rubber exports in 2011 would drop 1.3 percent from 780,000 tonnes expected this year, even though Vietnam’s output next year would rise 2.6 percent to 790,000 tonnes, said General Secretary Tran Thi Thuy Hoa of the Vietnam Rubber Association.

“Vietnamese companies have been pushing to boost rubber exports strongly, while abandoning the supply to domestic producers,” Hoa told Reuters in an interview.

Domestic demand is forecast to rise to around 30 percent of output by 2020 from 16 percent now, Hoa said.

The rubber association has been asking exporters, who sell more than half of their latex to top buyer China, to increase supply to domestic producers who can later export the finished products for a higher value, rather than have Vietnam simply export raw latex, Hoa said.

“Supporting domestic production is a way to ensure the sustainability of the domestic rubber industry,” Hoa said, adding that the association was seeking foreign investment in the domestic processing industry.

It will organise an international conference on 3-4 November in Ho Chi Minh City to highlight Vietnam’s rubber processing situation and attract foreign investors, she said.

Rubber prices, which hit all-time highs in Asia recently, could soften slightly next year, so Vietnam’s revenues could soften to around $2 billion, from more than $2 billion forecast this year, Hoa said.

Hoa cited international rubber industry forecasts which envisaged global rubber output to rise 5.6 percent to 10.73 million tonnes in 2011, surpassing an expected increase of 4.6 percent in demand to 10.66 million tonnes.

Output is expected to rise because the rubber trees planted by producer countries in recent years would become productive, she said.

Vietnam, the world’s fourth-largest natural rubber producer after Thailand, Indonesia and Malaysia, will not boost rubber exports for the rest of 2010 to catch up with high prices because it cannot quicken the pace at which it taps latex, Hoa said.

A drought earlier this year and rains also disrupted production, so Vietnam’s output for the whole year could not rise significantly but will reach 770,000 tonnes as planned, or 6.4 percent up from last year, Hoa said.

The Association of Natural Rubber Producing Countries, which includes Vietnam, said last month member countries’ 2010 output was likely to rise by 5.3 percent to 9.389 million tonnes, lower than an earlier estimate of 6.3 percent.

Vietnam’s rubber exports to China have dropped nearly 10 percent so far this year as it limited sales across the land border, so Vietnamese exporters were trying to shift to selling latex via the official channel, Hoa said.

Last year Vietnam exported nearly 495,000 tonnes of rubber to China, nearly 76 percent of it via unofficial trade involving non-bank cash payments for goods delivered across the land border.

Official rubber trade with China, based on terms such as free-on-board and cost-and-freight, accounted for just 9 percent of Vietnam’s overall rubber export, the rubber association said in a report, citing Vietnamese customs data.

But a surge in sales to other markets, such as Malaysia, Taiwan, Germany and the United States have helped offset the fall in China’s imports, Hoa said.

Vietnam exported 598,000 tonnes of rubber in the first 10 months of this year, up 6.8 percent from the same period last year while the value soared 94.5 percent to nearly $1.7 billion, government statistics show.

Rubber imported for re-export accounts for 14.5 percent of the country’s overall rubber exports, data from the rubber association show.

Vietnam plans to expand rubber plantations in the Central Highlands and central coastal provinces by adding a combined 178,000 hectares (440,000 acres) between now and 2015 in order to boost output and export, Hoa said.

Indian tyre makers buy rubber at record $4.33 per kg

MUMBAI (Reuters) - Indian tyre makers on Monday bought natural rubber at a record 192.5 rupees ($4.33) per kg as unseasonal rains tightened a supply squeeze in the world’s fourth biggest producer, three dealers told Reuters.

Tyre makers bought RSS-4 rubber (ribbed smoked sheet) by paying as much as 19,250 rupees per 100 kg at the Kottayam market in southern state of Kerala, higher than 19,100 rupees they paid last month.

The benchmark rubber November contract on India’s National Multi-Commodity Exchange (NMCE) hit a record high of 19,837 rupees per 100 kg earlier in the day.