Local tyre producers suffer small impact from US tariff

Earlier this month, the US agency determined exporters and producers from Vietnam would receive a tariff ranging from 6.23% to 10.08% with concerns Vietnam might have undervalued its currency to support exporters.

The decision was made after the US agency had launched an investigation into tyre imports from the Republic of Korea, Taiwan, Thailand and Vietnam in June.

The rates imposed by the US Department of Commerce are 6.23% for Sailun (Vietnam) Co Ltd, 10.08% for Kumho Tires (Vietnam) Co Ltd and 6.77% for other companies. Kumho Tires and Sailun are from the RoK and China.

But according to SSI Securities Research Centre, this may not have a significant impact on Vietnamese tyre producers.

Da Nang Rubber JSC is not affected by the US decision as it is applied on radial tyres, which are completely different from the firm’s outputs subject to the tariff, the company’s spokesperson told ndh.vn.

Exploring the US market is expected to help the company improve this year’s results after the business community has been struggling with the global spread of the coronavirus and the US-China trade war, the spokesperson said.

Da Nang Rubber JSC posted a 12% on-year decline in export revenue year to date. Its key export market – Brazil – has seen a slight recovery in the last two months.

In 2019, the company earned VND1.73 trillion (US$74.5 million) worth of exports, up 43% year-on-year and accounting for 42.9% of the full-year revenue – up 7.3 percentage points from 2018. Export revenue earned in American countries surged nearly 60% year-on-year to VND1.04 trillion in 2019, accounting for 62% of the total.

General Director of the Southern Rubber Industry JSC (Casumina) Pham Hong Phu told ndh.vn that the company’s products are subject to the decision.

“The US tariff is not too high so the business will not suffer from the decision. Besides, Casumina exports to 30 overseas markets, including the US,” he said.

The company also produces radial tyres. Radial tyre exports accounted for 64% of the company’s total export revenue in 2019.

Casumina posted a 27% year-on-year increase in total export revenue last year, which reached VND1.72 trillion.

Export revenue accounted for 39% of the company’s total revenue in 2019. The figure rose 29% in four consecutive years.

Meanwhile, Sao Vang Rubber JSC sells tyres to Asian markets such as Nepal, Pakistan, Cambodia and Malaysia.

After the US tariff was announced on November 4, Vietnamese tyre companies have seen mixed changes in their share prices.

Shares of Da Nang Rubber JSC (HoSE: DRC) fell a total of 1.8% in the two trading days ending November 6.

Shares of Casumina (HoSE: CSM) declined by total 2.7% and Sao Vàng Rubber JSC (HoSE: SRC) gained a total of 1.8% in the same period.