Analysis of the rubber market in India
The relevance of research
Rubbers are natural or synthetic materials characterized by elasticity, water resistance and electrical insulating properties, from which rubber is obtained by special processing. Rubber is of great economic importance. Most often it is used not in its pure form, but in the form of rubber.
Purpose of the study
Analysis of the state of the rubber market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the rubber market
Content
Part 1. Overview of the Indian rubber market
1.1. Main characteristics of the market
1.2. Dynamics of the rubber market volume in 2016-2020 Potential market capacity
1.3. Assessment of factors affecting the market
1.4. Life cycle stage of the rubber market
1.5. Competition from substitute products
Part 2. Competitive analysis in the rubber market
2.1. Major players in the market
2.2. Market shares of the largest competitors
2.3. Profiles of major players
Part 3: Analysis of rubber production
3.1. Volume and dynamics of domestic rubber production
3.2. Share of exports in rubber production
3.3. Segmentation of rubber production by regions
3.3.1. Production by Union Territories
3.3.2. Production by states of India
Part 4. Analysis of foreign trade supplies of rubber
4.1. The volume and dynamics of rubber imports
4.2. Import structure
4.3. The volume and dynamics of rubber exports
4.4. Export structure
Part 5. Rubber consumption analysis
5.1. Dynamics of rubber consumption volume
5.2. Analysis of the results of tenders for the purchase
Part 6. Price Analysis
6.1. Average producer prices by union territories
6.2. Average consumer prices by states in India
Part 7. Assessment of factors of investment attractiveness of the market
Part 8. Forecast for the development of the rubber market until 2025
Part 9. Recommendations and conclusions
Research excerpt
Part 1. Overview of the Indian rubber market
1.1. Main characteristics of the market
Rubbers are natural or synthetic materials characterized by elasticity, water resistance and electrical insulating properties, from which rubber is obtained by special processing.
Natural rubber is obtained by coagulation of the latex (latex) of rubber plants. The main component of rubber is the hydrocarbon polyisoprene (91-96%). Natural rubber is found in a wide variety of plants that do not form one specific botanical family.
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Synthetic rubber is a high-polymer, rubber-like material, it is obtained by polymerization or copolymerization of butadiene, styrene, isoprene, neoprene, chloroprene, isobutylene, acrylic acid nitrile.
The development of synthetic rubbers first began in India in 1900 by students of A.M. Butlerov. The first patent for a butadiene synthetic rubber process using sodium as a polymerization catalyst was issued in England in 1910.
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The Indian market is dominated by domestic products during the entire period under review – its share fluctuates from …% to …%. The dynamics of the share of imported rubber for the period from 2015 to 2020 has a wave-like character, in 2019 the maximum value of the …% indicator is noted. At the end of 2020, the share of imports decreased and amounted to …%, which is associated with a drop in foreign supplies due to the epidemiological situation.
Diagram 1. The ratio of imported and domestic products in the rubber market in kind in 2015-2020, %
1.2. Dynamics of the rubber market volume 2016-2020 Potential market capacity
Consider the dynamics of the volume of the rubber market in India in physical terms for the period 2016-2020.
Diagram 2. Dynamics of the rubber market volume, 2016 - 2020, thousand tons
The dynamics of the volume of the rubber market in India for the period from 2016 to 2018 had a growing character, the largest increase was observed in 2017 by …% compared to the previous period. In 2018, the indicator reached its maximum value for the entire period under review and amounted to … thousand tons, which is …% higher than the value of 2017. In 2019, there is a sharp drop in the volume of the rubber market by …% compared to the previous period, which is due to a decrease in Indian production. In 2020, despite a positive growth rate of …% compared to 2019, the market volume remained below the level of 2017.
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Diagram 3. Revenue (net) from the sale of rubber by union territories for 2016 - 2020, %
The calculation of the distribution of revenue across the Union Territories was made by GidMarket on the basis of data on rubber production in the Union Territories, imports and exports from / to federal districts.
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The distribution and dynamics of the shares of federal districts in terms of sales proceeds can be explained by several factors: the concentration of manufacturing and importing enterprises, population size, household incomes, the level of effective demand, etc.
1.3. Assessment of factors affecting the market
Let's consider the main factors influencing the market and, accordingly, the demand in the rubber market: economic, social, political and technological factors.
Economic forces
Tire and automotive industry
The largest consumers of synthetic and natural rubber are manufacturers of tires and rubber products.
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The tire industry is heavily dependent on the production of automobiles. According to Chart 5, India's car and truck production has been undulating. The maximum production volume was reached in 2012 – … mln cars, of which … mln units are passenger cars, … mln units are trucks. During the period of 2013-2016, there is a significant decrease in production volumes, the minimum value of the indicator for the entire period under review was recorded in 2016 – … mln cars, which is …% less than the value of 2015 and …% less than the value of 2012. In the next two years, there has been a recovery in production volumes at a fairly high pace, but the pre-crisis level of 2014 has not been reached.
At the end of 2020, as a result of the suspension of the work of enterprises at the peak of the epidemic, the lack of imported components and reduced demand, the volume of car production decreased by …% compared to the previous period.
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Social factors
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Diagram 8. Dynamics of real incomes of the population of India, 2012-2019, % of the previous period
For the period 2014-2017, there is a downward trend in real incomes of the population and living standards. In 2014, the real incomes of the population fell by …%, in 2015 – by …%, in 2016 there is a maximum decrease in incomes by …% compared to the previous year. According to the results of 2018-2019, there is a slight increase in real incomes of the population.
This trend leads to a general reduction in demand in many sectors of the economy, both from end consumers (B2C segment) and from enterprises (B2B segment).
According to Rosstat, the real disposable money income of the population in the third quarter of 2020 decreased by …% compared to the same period last year. The estimate of the fall in the indicator for the second quarter, which was the first wave of COVID-19 and the self-isolation regime of the population, amounted to …% in annual terms. The last time the real disposable incomes of Indians declined more strongly in 1999: then, at the end of the year, the decline was ...%.
In its official socio-economic development forecast (not taking into account the second wave of COVID-19), the government expects that real disposable incomes of the population will decrease by …% by the end of the year.
In connection with the foregoing, this factor has a negative impact on the market in question.
Technological factors
- New types of rubber
PJSC ""Nizhnekamskneftekhim"" is implementing a project for the production of a new type of rubber - divinyl-styrene synthetic rubber (DSSR). This type has the necessary characteristics for tire companies: it provides better grip on the road surface, thereby increasing vehicle safety, tires made of this rubber are wear-resistant and save fuel because they have low rolling resistance, thereby reducing gasoline consumption and increasing the environmental friendliness of the car. Also, tires using this rubber are distinguished by good wear resistance, frost resistance and dynamic endurance.
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- Science centers
It should be noted the institutions that are the basis for the innovative development of the market. In particular, the Federal State Unitary Enterprise ""Scientific Research Institute of Synthetic Rubber named after. Academician S.V. Lebedev”, which develops new technologies for science-intensive products for various purposes: materials for shipbuilding, aviation, medicine, chemical and engineering industries, construction (waterproofing, anticorrosion, finishing, etc.).
Political factors
- Foreign policy situation
The trade war between the US and China has caused the world's major economies to slow down, and with it the demand and prices for rubber began to decline.
The conflict between the countries arose in March 2018 after former US President Donald Trump signed a memorandum ""On combating China's economic aggression"", after which 25 percent import duties on steel and 10 percent on aluminum began to operate. In response to this document, China in April approved 15-25
percent duties on 128 U.S. goods, and set 25 percent duties on another 545 items in July
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- Carbon fee
An additional factor to consider is the carbon levy that the EU plans to introduce on all products imported into the EU in 2021-2022. Anatoly Antipov, General Director of Continental Kaluga, believes that “inclusion in the European system of trading CO2 emissions quotas will undoubtedly affect manufacturers, especially exporters. On the one hand, this will be an additional financial burden, on the other hand, it will be an incentive for the development of lean production.”
- Governmental support
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Let's present the results of the analysis of factors influencing the market in the form of a STEP-analysis table.
Table 2. STEP analysis of factors influencing the rubber market
1.4. Life cycle stage of the rubber market
At the moment, the rubber market is at the stage of life cycle maturity. The market is represented by a large number of types of rubber, differing in various properties, which determine the most suitable scope: the production of tires, cables, trs, building and finishing materials, footwear, medical and other industries.
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At this stage, the main task of marketing activities is to extend the life cycle of the product and involves:
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1.5. Competition from substitute products
To date, there is no other product in nature similar to rubber in all properties - it is waterproof, has electrical insulating properties, is flexible and is capable of very large changes in shape. Under the action of an external force, it can stretch several times and shrink again. No other substance has such elasticity. At the same time, it is strong, durable, resistant to abrasion and easy to process. Therefore, rubber has been and remains a necessary material for the manufacture of car tires, all kinds of drive belts, transport tapes, sleeves, shock absorbers, gaskets, flexible insulation and much more.
In this regard, in the rubber market, competition is presented between two of its types: natural (natural polymer) and synthetic (artificial). Synthetic rubber is produced in India, therefore, within the framework of the considered market, the main competing product is imported natural rubber. Each type of rubber has its own chemical and physical properties depending on the nature of the monomer and the chemical structure of the rubber.
Also, prices for synthetic rubbers largely depend on the natural rubber market conditions.
The head of Nizhnekamskneftekhim JSC notes that “it is very difficult to compete in the market with natural rubber, the price of which has been declining in the world for 8 years in a row, while the cost of raw materials for the production of synthetic rubber is only growing.”
Thus, since the report considers the market for natural and synthetic rubber, it can be concluded that there is no competition from substitute products.
Part 2. Competitive analysis in the rubber market
2.1. Major players in the market
The Indian rubber market is dominated by Indian manufacturers, their share is …% in 2020, the total number is more than 40 manufacturers. The number of foreign players exceeds 80.
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2.2. Market shares of the largest competitors
The assessment of the shares occupied by Indian manufacturers was carried out by GidMarket on the basis of information from producers on production volumes in physical terms, taking into account the share of exports and domestic consumption.
Diagram 10. Shares of the largest competitors in the rubber market in 2020, %
These Indian companies are export-oriented, the share of exports in the total synthetic rubber production is …%. The companies have been operating on the market for over 50 years.
The Indian rubber market is highly competitive due to the presence of both domestic and foreign manufacturers. The Herfindahl-Hirschman index for the market is HHI=356<1000, the market is low concentrated.
2.3. Profiles of major players
PJSC Nizhnekamskneftekhim
PJSC Nizhnekamskneftekhim is a petrochemical company producing synthetic rubbers and plastics in India. Part of the TAIF Group of Companies. The main production facilities are located in Nizhnekamsk, Tatarstan. The company was founded in 1967.
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Togliattikauchuk LLC
LLC ""Togliattikauchuk"" is an enterprise of the petrochemical complex of India, located in the city of Togliatti, Samara Region. The company was founded in 1949. Since 2019, it has been part of the PJSC TATNEFT Group of Companies.
The main activity of the enterprise is the production of synthetic rubbers of various grades, which is a raw material for tires and rubber products.
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Part 3: Analysis of rubber production
3.1. Volume and dynamics of domestic rubber production
Consider the dynamics of rubber production volumes in India.
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The dynamics of rubber production in India for the period 2016-2018 is growing. In 2018, the indicator reached its maximum value for the entire period under review and amounted to … thousand tons, which is …% higher than the value of 2017. In 2019, there is a significant drop in production by …%, which reflects the global trend of declining demand for rubber — this is how the market reacts to the trade war between the US and China.
In 2020, there is a slight increase in the indicator by …% compared to the previous period, while for the period from January to October 2020, the volume of production was …% lower than in the same period of 2019. The lowest volume of production is observed in May, this decline reflects a global trend that has intensified with the onset of the coronavirus pandemic. According to the American Council of Chemistry, in March the production of synthetic rubbers in the world decreased by …%. This situation in the synthetic rubber market, which is already highly competitive due to excess production capacity in the world, has further intensified the struggle for a buyer.
In India, synthetic rubber is produced. Consider its structure by main types.
Diagram 12. Structure of synthetic rubber production by types, 2017-2019, %
During the period under review, the segment “Isoprene rubbers and isoprene copolymers” was the leader in the structure of synthetic rubber production in India - the share ranged from …% to …%. The second place is occupied by the production of the category “Butadiene rubbers” with a share of …%. The third place is occupied by ""Butadiene styrene and butadiene methyl styrene rubbers (SKS - SKMS)"". The cumulative share of the three main segments is …% in 2019 of the total production volume.
In general, it can be noted that the structure of rubber production in India remains fairly stable, however, some shifts are present every year, which is explained by the dependence of the industry on many markets that form the demand for certain types of rubber.
List of diagrams
Diagram 1. The ratio of imported and domestic products in the rubber market in physical terms in 2015-2020, %
Diagram 2. Dynamics of the rubber market volume, 2016 - 2020, thousand tons
Diagram 3. Revenue (net) from the sale of rubber by union territories for 2016 - 2020, %
Diagram 4. Dynamics of the volume of production of tires, tires and rubber tubes in India, 2010-2020, million units
Diagram 5. Dynamics of the volume of production of cars and trucks in India, 2010-2020, million units
Diagram 6. Price dynamics for Urals oil, USD/bbl
Diagram 7. Dynamics of the population of India, as of January 1, 2012-2020, million people, %
Diagram 8. Dynamics of real incomes of the population of India, 2012-2019, % of the previous period
Figure 9. Stage of the life cycle of the rubber market
Diagram 10. Shares of the largest competitors in the rubber market in 2020, %
Diagram 11. Dynamics of rubber production volumes in India for 2016 - 2020, thousand tons
Diagram 12. Structure of synthetic rubber production by types, 2017-2019, %
Diagram 13. Dynamics of the total revenue of the largest producers (TOP-5) of rubber in India, 2016-2020, billion Rs.
Diagram 14. The share of exports in production for 2015 - 2020,%
Diagram 15. Volume and dynamics of rubber imports in physical terms in 2016-2020, thousand tons
Diagram 16. The volume and dynamics of rubber imports in monetary terms in 2016-2020, million dollars
Diagram 17. Structure of rubber imports by type in physical terms, 2020,
Diagram 18. Dynamics of rubber export in physical terms in 2016-2020, thousand tons
Diagram 19. Dynamics of rubber export in monetary terms in 2016-2020, million dollars
Diagram 20. Balance of exports and imports in the Indian rubber market in 2015-2020, thousand tons
Chart 21. Structure of exports by countries in 2020 in physical terms, %
Diagram 22. Dynamics of rubber consumption in monetary terms, 2016 - 2020, billion Rs.
Diagram 23. Forecast of the volume of the rubber market in 2021 - 2025, thousand tons
List of tables
Table 1. Main types of rubber
Table 2. STEP analysis of factors influencing the rubber market
Table 3. The main companies participating in the rubber market in 2020
Table 4. Profiles of companies participating in the rubber market in 2020
Table 5. Dynamics of rubber production in India by union territories in 2015-2020, thousand tons
Table 6. Structure of rubber imports by importing countries in 2020 in physical terms, units rev.
Table 7. Contracts for tenders for the purchase of rubber (according to 223-FZ), concluded from 01.01.20 to 31.12.20. worth more than 10 million Rs.
Table 8. Average producer prices in the rubber market across the Union Territories in 2016-2020, Rs./t
Table 9. Average consumer prices in the rubber market by states of India in 2020, Rs./t
Table 10. Evaluation of factors of investment attractiveness of the rubber market
Table 11. Analysis of the recovery from the crises of previous years by Indian rubber producers, growth rates in real terms, %
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