Vietnam’s top rubber producer Vietnam Rubber Group (VRG) is actively pursuing buyers outside of China on fears that the coronavirus will erode demand from its biggest customer, Bloomberg reported.
VRG, the world’s third-largest listed producer of rubber, is looking for new markets and is considering cutting export prices, a person familiar with this matter told Bloomberg, asking not to be identified as the matter is private. The company is concerned that demand from China, which accounts for half of the group’s shipments of latex, will fall, the person said.
The rubber industry has been roiled this week as the spread of the virus in China clouds the outlook for global growth and especially auto production and tire demand. More than a dozen Chinese provinces announced an extension of the current Lunar New Year holiday by more than a week, with carmakers from Toyota Motor Corp. to General Motors Co. saying production will be halted through at least February 9.
VRG shares slumped 4.4% in Hanoi on Friday, poised for a second day of decline after markets resumed trading following the Lunar New Year holiday.
The company exports about 70% of its rubber output. Most shipments to China are natural rubber, while rubber products account for a small portion.
About 70% of all Vietnamese rubber exports goes to China, according to Vietnam’s customs data.