Vietnam to reduce rubber shipments by almost a third

Vietnam, the world’s fourth-largest rubber exporter, will cut shipments by as much as 31% this year as a global economic slowdown reduces demand.

The country will reduce exports by as much as 200,000 tons, taking the combined reduction by the four largest producers of the commodity to 1.1 million tons, the Vietnam Rubber Association said in a statement posted on its website on Monday.

Thailand, Indonesia and Malaysia, the top three suppliers, agreed last year to cut output to bolster prices, which dropped from a 28-year high in June to a six-year low on December 5. The global economic downturn has slashed demand for vehicles and tires made from the raw material while declining crude oil prices have reduced the cost of synthetic rubber.

Vietnam’s export reduction will help bring supply in line with demand so producers “can survive 2009 when the global economy hasn’t shown signs of recovery,” the Ho Chi Minh City-based association said.

Rubber for June delivery on the Tokyo Commodity Exchange added 3.9% to 150.6 yen a kilogram ($1,619 a ton) at 1:48 p.m. local time. The futures fell 56% last year while crude oil slumped 54 percent.

Viet Nam shipped 645,000 tons, or 97% of its total output, in 2008, down 9.8% from a year earlier, according to the association.

Viet Nam Rubber Group, one of the 94 members of the industry association, is seeking a VND1.5 trillion ($85.8 million) loan at a preferential rate from the government to purchase 100,000 tons of rubber from growers for storage before trees are chopped down for other more lucrative crops, the statement also said. (Bloomberg)