Rising prices and land conversions set to drive rubber profits

Since the beginning of the year, natural rubber prices in major Southeast Asian producing markets have climbed sharply, exceeding the highest levels in the past decade. SVR10 rubber prices are expected to stay elevated around $2.5/kg throughout 2027 due to processing plants hoarding raw materials, anticipating possible supply shortages.

Analysts at MB Securities (MBS) anticipate El Nino will reduce tapping yields in the 2027 crop season, potentially boosting SVR10 prices to $2.8-3/kg in the latter half of 2027. However, weak consumption demand in major markets like China and the United States exerts downward pressure on prices. Vietnam's domestic rubber sector saw natural rubber output rise 5% to 440,000 tonnes in the first half of 2026, the highest level since 2021.

Higher global rubber prices lifted Vietnam's average export price by 4% to $1,924 per tonne, with exports reaching 638,000 tonnes, down 8% YoY. Rubber exports to China, Vietnam's largest market, declined, while exports to other markets, including Indonesia, grew strongly. Vietnamese rubber companies reported significant profit growth in the first half of 2026, with Vietnam Rubber Group JSC's net profit up 68% and Phuoc Hoa Rubber JSC's net profit soaring 245%.

Rubber industry profits are expected to surge 28% and 48% YoY in 2026, thanks to elevated prices, tree liquidation, and land conversion projects. Despite positive outlooks, risks remain, such as potential price drops due to weaker vehicle consumption in China and extreme weather affecting tree health.