Vietnam's Exports to China Fall by Over 84%

Vietnam’s pepper exports to China have seen a significant drop of over 84% in 2024, raising concerns in the market. According to data from the Vietnam Pepper and Spice Association (VPSA), the country exported a total of 200.894 tonnes of pepper between January and September 2024. This includes 177.953 tonnes of black pepper and 22.941 tonnes of white pepper.

While the export volume saw a slight decrease of 1,7% compared to last year, the overall export turnover increased by 46,1%. This sharp rise in turnover can be attributed to higher global pepper prices, with the average export price for black pepper reaching USD 4,85 per kg and white pepper fetching USD 6,46 per kg. Black pepper alone contributed USD 781,9 million to the total export value, while white pepper added USD 142,1 million.

Higher Prices, But Lower Exports to China

The rise in pepper prices has been notable. In the first nine months of 2024, the average export price for black pepper was USD 4,85 per kg, while white pepper was priced at USD 6,46 per kg, showing increases of 40,9% and 30,4%, respectively, compared to the same period last year. Despite these price rises, China imported only 8.905 tonnes of pepper from Vietnam, a significant 84,1% decrease from the previous year.

Other countries like the UAE and South Korea increased their demand. The UAE imported 13.159 tonnes (up 41,1%), while South Korea imported 5.710 tonnes (up 59%). These contrasting trends reflecting as balancing act for Vietnam’s pepper market. With strong demand from some countries, while China’s imports have fallen dramatically.

Exports to Europe and the Americas Hold Strong

While exports to China have dropped, Vietnam has seen robust demand from the Americas and European markets. Exports to the Americas rose by 49,6%, with the United States importing 57.289 tonnes of black pepper. It's making Vietnam’s largest market in this region and accounting for 28,5% of the total market share.

In Europe, exports have grown by 33,6%, with Germany leading the charge, importing 12.777 tonnes (up 87,1%). Other countries like the Netherlands also contributed to the growth, importing 8.065 tonnes (up 35,4%). Africa remained a smaller market, accounting for 5,8% of total exports, with 11.632 tonnes exported.

Pepper Prices Face Global Pressure

Despite high prices, the global market for black pepper remains under pressure due to reduced demand from key markets like China. In Vietnam, dry black pepper is currently trading between USD 6,46 and USD 6,71 per kg, down slightly from earlier in the year but still significantly higher than in 2023. This drop in demand comes despite strong prices, with global uncertainties like inflation, rising interest rates, and geopolitical tensions affecting the market.

Moreover, the impact of the Middle East conflicts and a strong US dollar has contributed to falling pepper prices, as buyers remain cautious about importing large volumes. Traditional markets have also stocked up on pepper and are now waiting for prices to stabilize before placing new orders.

Optimism for the Pepper Industry Despite Challenges

Vietnam, which accounts for nearly 50% of the world’s pepper supply, continues to remain optimistic about the industry’s future. The country’s pepper industry is expected to generate between USD 1,3 and USD 1,4 billion by the end of 2024, a substantial rise from the USD 0,91 billion earned in 2023.

Vietnam’s processed pepper exports have also increased by over 50% compared to last year, providing a buffer against the drop in whole pepper exports. With the main harvest season from February to April still to come, market players believe that prices will remain stable in the long term.

Conclusion: Short-Term Caution, Long-Term Optimism

Farmers and exporters need to be cautious in the short term due to global pressures and reduced demand from major markets like China. However, the long-term outlook remains optimistic, with stable prices and strong demand from Europe and the Americas expected to keep Vietnam’s pepper industry on track for a record year.