OVERVIEW OF RUBBER EXPORT OF VIETNAM TO INDIA
Overview of rubber export of Vietnam
The term "rubber" refers to both the natural product derived from the Hevea Brasiliensis tree and various synthetic polymers, often collectively known as "synthetic rubber." In this thesis, the discussion will focus on the broader definition of rubber, which includes both natural and synthetic materials.
“rubber” without any further explanation is referred as natural rubber
1.1.1.1 Natural rubber and synthetic rubber
Natural rubber (NR) is characterized by its plasticity, electrical resistance, adhesiveness, and elasticity, and is a high-molecular weight terpene hydrocarbon polymer It is derived from the lattices of over 2,000 plant species across 311 genera and 79 families, with Hevea Brasiliensis contributing to more than 99% of global NR production due to its high yield and low impurity levels In contrast, synthetic rubber (SR) lacks a specific chemical definition and generally refers to a category of high-molecular weight polymers that exhibit physical properties similar to those of natural rubber.
Natural rubber is harvested from latex, a neutral milky fluid that oozes from cuts made in the bark of rubber trees This fluid is collected in containers, such as coconut half shells or plastic cups, and should be gathered promptly after the flow stops, typically within 3 to 4 hours post-tapping Once collected, the latex is transferred into galvanized iron buckets for further processing.
Some trees continue to drip after rubber collection, resulting in a small amount of "cup lump" that can be gathered during the next tapping In certain countries, farmers prefer collecting rubber as cup lump due to its lower labor requirements compared to latex, which necessitates waiting in the field for collection With cup lump, farmers can return after several days to gather it from containers Additionally, the latex that coagulates on the cuts is known as "tree lace," and together with cup lump, these account for 10–20% of the total dry rubber production Any latex that falls to the ground is referred to as "earth scrap," which is also collected for the production of lower-grade rubber products.
(Source: Natural rubber statistics 2012, Malaysian Rubber Board) The world rubber production increases very fast over years in general In
In 2012, global rubber production surpassed 26.4 million metric tons, reflecting a 1.31% increase from the previous year The global economic crisis of 2008-2009 led to a decline in rubber production, but it rebounded quickly in 2010 with an impressive growth rate of 11.03% Notably, synthetic rubber production is more susceptible to economic fluctuations compared to natural rubber, which is primarily influenced by climatic conditions and the yield of rubber trees.
Total RubberSynthetic RubberNatural Rubber
Table 1.1: Natural rubber production of major rubber producing countries
Thailand, Indonesia, and Malaysia are the top three natural rubber-producing countries, collectively accounting for 70% of global production through their membership in the International Tripartite Rubber Council Their dominance in the rubber industry is largely attributed to their abundant natural resources and ideal plantation conditions for cultivating rubber trees.
Chart 1.2: World natural rubber consumption
(Source: "Rubber Statistical Bulletin”, the International Rubber Study Group.)
In 2009, rubber consumption fell by 7.7% due to the global crisis, but rebounded in 2010, reaching 10.778 million metric tons, a 14.78% increase from the previous year This trend illustrates that while rubber consumption is significantly influenced by economic performance, there is a persistent upward trajectory in global rubber consumption.
Chart 1.3: Consumption of NR in main consuming countries in 2012
(Source: the International Rubber Study Group) China is the biggest rubber consuming market with nearly a third of total world’s rubber consumption Ranking 2nd and 3rd are India and the U.S.A
1.1.2 Features and Competitive advantages of Vietnam’s natural rubber 1.1.2.1 Natural rubber production
As of 2012, Vietnam boasts approximately 910,500 hectares of rubber plantations, making it the fifth largest rubber-producing country in the world The nation's strong position in the rubber industry is attributed to its long history of cultivation, along with its favorable climate and soil conditions.
Table 1.2: Area, output and productivity of Vietnam’s natural rubber period
Increase over previous year Harvesting
Productivity (kg/ha) Amount (ha) Percent (%)
(Source: General Statistics Office of Vietnam, January 2013) Vietnam’s rubber output in 2012 is 863,600 tons (ranking 5th globally), increases by 17.7% over 2011 In 2011, average productivity is 1.72 kg/ha, ranked
2 nd globally (after India – 1.784kg/ha) However, average productivity in 2012 is down to 1.707kg/ha, decreases by 0.5% because a substantial new area has been put in to harvesting in 2012
Table 1.3: Region-wise output and productivity of Vietnam’s NR in 2011 Region Total area (ha) Harvesting area (ha) Output (tons) Productivity (kg/ha)
(Source: Summary of Vietnam Rubber Association over statistics of General Statistics Office of Vietnam and Ministry of Agriculture and Rural Development)
In Vietnam, rubber cultivation is predominantly concentrated in the Southeast region, which accounts for 57.7% of the total area at 481,300 hectares, while the Highlands and Central regions contribute 24.7% and 15.2%, respectively The Northern region is unsuitable for rubber growth, resulting in a minimal contribution of only 2.4% Despite government efforts to expand rubber cultivation, domestic land availability remains limited, prompting a trend towards overseas investments in countries like Laos, Cambodia, and Myanmar.
Vietnam's rubber production is characterized by two types of producers: rubber estates and small holdings Prior to 1975, small holdings accounted for only 4% of the total rubber area However, following government encouragement of rubber cultivation as a lucrative multi-purpose crop, the sector experienced significant growth As rubber prices rose annually, more individuals began to cultivate it By 2007, according to the Vietnam Rubber Association, small holdings had expanded to 253,320 hectares, representing 46.1% of the total rubber area, in contrast to higher proportions in Indonesia, Malaysia, and Thailand, which are 85%, 90%, and 95%, respectively The small holding area is projected to increase by 3% annually.
Since 2006, Vietnam has witnessed significant growth in small rubber holdings, shifting the landscape of the rubber industry By 2009, the area dedicated to rubber estates increased by just 3.8%, totaling 333,900 hectares, which accounted for 49.3% of the total rubber area This marked the first instance where the proportion of rubber area managed by estates fell below that of small holdings By 2011, the distribution between rubber estates and small holdings reached a balance, highlighting the evolving dynamics of rubber cultivation in the country.
Table 1.4: Production type – wise output and productivity in 2011
Statistics reveal that while the average productivity of the estate sector appears lower than that of small holdings, this comparison is misleading Small holdings encounter various challenges, including labor skill deficiencies, technological limitations, subpar clone quality, and disease issues, which negatively impact their productivity Conversely, the lower average productivity of estates can be attributed to their distribution across diverse regions of Vietnam, including the central coast and northwestern areas, where conditions for growth are less ideal In contrast, small holdings are predominantly located in the Southeast region, which offers more favorable growing conditions, resulting in their higher average productivity.
Besides, the farmers are also very dynamic in adapting new growing techniques and make a lot of serious effort in raising their productivity
Table 1.5: Vietnam’s NR output, import and consumption in 2011 Year Output
Domestic consumption Amount (tons) Proportion over output (%)
According to the Vietnam Rubber Association and data from the General Statistics Office of Vietnam and the Ministry of Agriculture and Rural Development, Vietnam's domestic consumption of natural rubber has been steadily increasing each year, despite global economic challenges However, this consumption remains relatively low, accounting for only about 17.37% of the country's total production in 2012 The limited growth is attributed to the underdevelopment of Vietnam's rubber manufacturing industry, as many domestic producers prioritize exports Consequently, local rubber product manufacturers often rely on imports to ensure a stable supply and maintain their business operations.
Vietnam has its own TSR grades with country scheme code: SVR CV 60, SVR CV 50, SVR L, SVR 3L, SVR 10CV, SVR 10, SVR 20CV and SVR 20
Technical parameters of these grades can be found at Appendix
Besides, Vietnam also exports a substantial amount of RSS rubber (especially RSS3), Latex (DRC 100%), SKIM rubber and compound rubber
1.1.2.4 Competitive advantages of Vietnam’s natural rubber Suitable natural conditions
Vietnam, situated in Southeast Asia, plays a significant role in the global rubber industry, which encompasses 80% of the world's rubber cultivation area The country's favorable climate and optimal plantation conditions, particularly its rainfall levels, make it an ideal environment for rubber tree growth.
The rubber production industry in Vietnam is highly labor-intensive, with approximately 52% of the country's workforce engaged in agriculture and forestry Vietnamese workers are known for their diligence and productivity, providing a competitive edge in pricing compared to rivals like Thailand, Malaysia, and Indonesia.
Vietnam government supports strongly the rubber industry Via Vietnam Rubber Group, Vietnam government successfully controls and directs this industry
Overview of India’s rubber market
Table 1.7: Key Indicators of Indian natural rubber industry (2010-2011)
World Ranking in Area under rubber (Next to Indonesia, Thailand, Malaysia, China, Vietnam)
World Ranking in NR Production ( After Thailand, Indonesia, Malaysia and India)
World Ranking in NR Consumption ( After China and India)
World Ranking in productivity First
Relative share of India in global area 6.30%
Relative share of India in global production of NR 8.20%
Relative share of India in global consumption of
Relative share of India in global elastomer comsumption
Total area under rubber plantation 711560 ha Number of small holdings (Less than 10ha In area) 1.19 million Number of estates (20ha and above) 550 nos
Average size of small holdings 0.54 hectare Share of area in small holding sector 90%
Share of production in small holding sector 93%
Productivity in India 1806 kg/ha
No of registered rubber goods manufacturers 4356
According to the Economic Survey of 2010-11, India ranks as the world's fourth largest rubber producer, with three main types: natural, synthetic, and reclaimed rubber Natural rubber constitutes about 42% of global production, and Kerala is responsible for approximately 90% of India's natural rubber output Additionally, India is a significant consumer of rubber, accounting for nearly 9% of global consumption, placing it second only to China.
The 2 nd rank used to be the U.S but due to the high development rate of Indian’s auto industry, India has taken this position On the other hand, India is also famous for its highest productivity, which has been kept for years The small holdings dominate the industry with 90% total rubber area and 93% total production After collection, small holdings sell natural rubber to dealers who are responsible for its sale to rubber manufacturers
Year NR % of growth over previous Year
% of growth over previous Year
India ranks as the fourth largest producer of natural rubber globally, contributing over 9% to the world's output, trailing only Thailand, Indonesia, and Malaysia Unlike most major rubber-producing countries, which benefit from moderate and evenly distributed rainfall, India's rubber-growing regions face excessive and highly seasonal rainfall This climatic challenge leads to a longer gestation period for rubber trees, reduced tapping days, increased susceptibility to fungal diseases, and rising cultivation and production costs.
Natural rubber constitutes the majority of rubber production in India, accounting for approximately 88-89% of the total output, while synthetic rubber and reclaim rubber represent a smaller share This balance between natural and synthetic rubber remains relatively stable.
In 2010-2012, both natural rubber and synthetic rubber production of India recovered strongly in volume Besides, reclaim rubber production also increases in every year
Table 1.9: India’s rubber small holdings and estates
Units Area (ha) Area (%) Units Area (ha) Area (%)
In India, the cultivation and production of rubber are primarily managed by smallholders, defined as units with an area of up to 10 hectares since 2010 As of 2008, a staggering 98.4% of rubber producers operated on less than 2 hectares, with the average holding size in the rubber sector being just 0.44 hectares This trend indicates a growing prevalence of smallholdings within the total rubber area in India.
Year NR SR Total (NR
(Source: Member directory 2012-2013, AIRA) Rubber consumption of India increases every year even in the crisis period of 2008-2009 In period 2010-2012, the consumption increased by averagely 6.5%
During the economic recovery from 2009 to 2011, synthetic rubber experienced a remarkable growth rate of 18.5%, significantly outpacing natural rubber However, between 2011 and 2012, the growth rate for synthetic rubber production moderated to 9.3%.
Table 1.11: Import as percentage to consumption of NR of India
Year Import as % to consumption
India's rubber demand is surpassing domestic production capabilities, leading to a growing reliance on imports The gap between supply and demand has widened over the years, with imports accounting for only 10% of total natural rubber consumption in the fiscal year 2007-2008 However, by 2011, this dependence on imported rubber was on the rise, highlighting the challenges faced by the Indian rubber industry.
In 2012, the import of rubber was favored over domestic procurement due to lower global rates, with domestic prices averaging 185 rupees per kg compared to 178 rupees globally Rubber Board Chairman Sheela Thomas noted that weak global rubber prices, driven by an economic slowdown, have resulted in decreased demand throughout the year.
Table 1.12: NR consumption per capita of major NR consuming countries in
Population Consumption (Kg) Consumption per capita (Kg)
(Source: The writer capitalized data from the International Rubber Study
India's per capita consumption of natural rubber stands at only 800 grams, significantly lower than the 3 to 6 kg seen in China, the USA, and Japan This disparity indicates substantial growth potential for the rubber industry in India, which has not yet reached saturation in rubber product consumption Contributing factors to this low per capita rate include a large population and a relatively late stage of economic development However, with rising living standards and the availability of affordable automobiles, this consumption rate is expected to increase rapidly in the near future.
Table 1.13: India’s rubber consumption - sector wise
Tire Sector Non Tyre Sector
Tire Sector Non Tire Sector
Tire Sector Non Tire Sector
Tire Sector Non Tire sector
In the fiscal year 2007-2008, the ratio of rubber consumption in the tire sector compared to the non-tire sector was 1.35, which increased to 1.789 by 2010-2011 This upward trend indicates a growing emphasis on tire production in India's rubber consumption.
Reclaim rubber is predominantly utilized in the non-tire sector, while synthetic rubber surpasses natural rubber in usage, indicating a stronger emphasis on tire production in India The tire industry is attracting significant interest from both the Indian government and businesses, leading to an increasing number of multinational tire manufacturers establishing operations in the country.
CURRENT SITUATION SVR 3L RUBBER EXPORT OF
Current situation of rubber export of Vietnam to India and the
2.1.1 Rubber export turnover 2.1.1.1 General natural rubber export turnover of Vietnam
Chart 2.1: Rubber Export volume and value of Vietnam
(Source: Summary of Vietnam Rubber Association from data of Vietnam Bureau of
The economic downturn of 2008-2009 significantly impacted the export volume and value of rubber-producing countries, including Vietnam In 2007, Vietnam's rubber exports to Taiwan reached $67.4 million, but this figure plummeted to $40 million in 2008 Despite a slight decrease in volume, the export volume in 2008 remained higher than in 2007 due to relatively high prices earlier in the year However, by late 2008 and early 2009, a dramatic drop in prices led to a substantial decline in export value.
From 2008 to 2012, the rubber export volume increased continuously
Averagely, Vietnam export more natural rubber by 12% each year Year 2012 marks the highest export volume ever with 1,023,231 tons, increases by 25.34%
In 2011, the rubber industry saw an increase in domestic production and a rise in temporary imports and re-exports, which contributed to higher export volumes However, despite a successful year, the influx of new entities into the market led to a decline in prices, resulting in an 11.6% decrease in export value compared to the previous year.
Table 2.1: Origin-wise Vietnam’s natural export volume in 2012
Origins Export volume (tons) Proportion (%) Compared to 2011 (%)
(Source: Summary of Vietnam Rubber Association from data of Vietnam Customs)
In 2012, Vietnam exported over 1 million tons of rubber, with 892,969 tons, or 87.3%, sourced from domestic production, while temporary imports and re-exports accounted for 12.7% Key import sources included Cambodia (2% with CSR L, CSR 5, CSR 10), Thailand (0.7% with RSS 3), Myanmar (0.6% with MSR 20 and RSS 3), Malaysia (0.6% with SMR 20), Laos (0.1% with SLR 10, SLR 3L), and other sources (9.2%) Despite being the 5th largest natural rubber producer, Vietnam's temporary imports and re-exports significantly boost total export turnover The imported rubber often consists of lower-quality grades, such as SVR 20, which are not competitively produced domestically, while Vietnam primarily produces SVR 3L The tire industry, which consumes about 70% of the world's natural rubber, typically prefers these lower-quality grades.
Vietnamese enterprises are increasingly sourcing natural rubber from overseas, driven by the short-term profit potential In 2010, Vietnam imported 127,100 tons of natural rubber, valued between USD 300 million and USD 400 million The most commonly imported forms include block rubber TSR 10 (18.4%) and TSR 3L/L, followed by RSS (15.7%) and TSR 20 (8.3%) Notably, approximately 60% of this volume is earmarked for re-export, while 40% is intended for domestic consumption.
Table 2.2: Top export market of Vietnam’s NR in 2012
Export in 2012 Compared to 2011 Volume
In 2009, the global economic downturn led to a decrease in Vietnam's rubber export markets, dropping to 71 countries from 73 in 2008 However, by 2012, Vietnam's rubber exports rebounded, reaching 78 countries, an increase of five markets compared to 2011.
The major part of Vietnam’s rubber is contributed by 20 top export markets with 96.8% volume and 96.7% value
In 2012, China remained Vietnam’s largest natural rubber export market, accounting for 48.2% of exports, with a volume of 492,749 tons valued at USD 1.3 billion This marked a decline of 1.7% in volume and 31.5% in value compared to 2011 While China is a key market for Vietnam, it also imports rubber from other major producers like Thailand, Malaysia, and Indonesia, holding a 30% share of global rubber imports The share of Vietnam’s natural rubber exports to China has gradually decreased due to local exporters diversifying their markets and Chinese restrictions on cross-border trade Despite the importance of cross-border trade for Vietnam's rubber export turnover, official export channels have seen stagnant growth due to high taxes, with Chinese importers facing a 25% tax on official imports compared to no taxes on cross-border transactions Consequently, the simplicity and speed of cross-border export procedures have made them the preferred choice for both sellers and buyers.
Since late 2009, the China Commodity Import and Export Management Department has implemented restrictions on border trade for safety checks, leading to various policies that control importers and regulate demand and prices When supply exceeds demand, Chinese traders collaborate to lower prices, while frequent changes in border trade policies often leave Vietnamese suppliers unaware until they reach the border with their goods This situation results in goods being stuck at the border and further drives down prices Experts warn that such border trading poses significant risks to the Vietnamese economy, particularly concerning price fluctuations and payment issues Additionally, the low-quality standards set by Chinese buyers discourage Vietnamese manufacturers from improving their products, perpetuating the production of low-quality goods Furthermore, the informal nature of border trade, which typically avoids contracts and bank transactions, hinders the government's ability to collect tax revenues from these transactions.
Malaysia rises dramatically in 2012 as the second biggest export market of Vietnam with share of 19.6% (200,400 tons in volume, USD564 million in value)
This shows an increase of 246.3% in volume and 145.9% in value over the previous year
The third biggest export market of Vietnam’s rubber is India with share of 7%
(71.676 tons in volume, USD211 million in value) This shows an increase of 198.1% in volume and 116.8% in value
Other smaller markets with share below 5% include Korea (3.9%), Taiwan (3.8%), Germany (3.3%), and USA (2.3%) Russia market has decreased significantly ( - 50.9% in volume) and now receives share of only 0.6%
2.1.1.2 Rubber export turnover of Vietnam’s natural rubber to India
Table 2.3: NR export turnover of Vietnam to India
Amount (tons) Proportion (%) Amount (USD) Proportion (%)
Before 2010, India accounted for less than 1% of Vietnam's natural rubber exports, making it a minor market However, from 2010 to 2012, there was significant growth in export turnover, with Vietnam exporting 20,038 tons of natural rubber to India in 2010, representing 2.56% of the country's total natural rubber exports This marked a remarkable increase of 245% compared to the previous year.
2012 also experienced a huge increase by 198.1% in volume and 116.8% in value
India has emerged as the third-largest rubber export market for Vietnam, holding a 7% share, following China and Malaysia Additionally, it boasts the third-fastest growth rate among Vietnam's top natural rubber export markets, trailing only Malaysia and Pakistan.
Table 2.4: Import value of major NR import market of India in 2011
Exporters Import in 2008 Import in 2009 Import in 2010 Import in 2011
World 229659 100 269554 100 637242 100 708284 100 Indonesia 70789 30.82 128493 47.67 288986 45.35 243771 34.42 Thailand 116682 50.81 100122 37.14 181260 28.44 189161 26.71 Viet Nam 5900 2.57 6836 2.54 58940 9.25 81398 11.49 Malaysia 16225 7.06 7224 2.68 31405 4.93 50803 7.17
Sri Lanka 16176 7.04 18465 6.85 36117 5.67 15106 2.13 Côte d'Ivoire 65 0.03 2001 0.74 13402 2.1 14536 2.05 Other 3055 1.33 6413 2.38 25112 3.94 76179 10.76
From 2007 to 2011, Indonesia and Thailand emerged as India's largest natural rubber import markets Prior to 2009, Thailand held the top position with approximately 50% market share However, following a series of seminars, exhibitions, festivals, and high-level visits aimed at strengthening bilateral relations, both India and Indonesia significantly enhanced their trade dynamics.
Indonesia has surpassed Thailand to be the largest rubber import market of India
Before 2010, Vietnam held a mere 2.6% market share as a natural rubber exporter to India However, since 2010, Vietnam's natural rubber exports to India have significantly increased, positioning the country as the third-largest supplier of natural rubber to India with an impressive 11.49% market share in 2011.
2.1.2 Structure of natural rubber export 2.1.2.1 Major export grades of Vietnam’s natural rubber
Table 2.5: Export Rubber grades produced in Vietnam in 2012
Total rubber export, which is produced domestically 892,969 87.27 25.3 2.672,755 Total export 1,023,231 100.0 25.3 2,859,876
(Source: Summary of Vietnam Rubber Association from data of Vietnam Customs)
In 2012, domestically produced rubber constituted over 87.27% of Vietnam's total rubber export volume, with the most exported grade being SVR 3L at 401,174 tons, accounting for 39.21% of exports and reflecting a 13.3% increase from 2011 The second most popular grade, SVR 10, saw exports rise by 32.6% to 195,546 tons, representing 19.1% of total exports Additionally, compound rubber exports surged to 109,857 tons, doubling the previous year's figures, largely due to zero import tax for this grade in China While most rubber grades experienced volume increases compared to 2011, latex, SVR 10CV, and skim rubber saw declines Overall, 2012 marked an increase in rubber export volumes driven by peak prices in 2011, although the overall value decreased due to lower prices.
2.1.2.2 Export turnover of Vietnam’s SVR 3L rubber
Table 2.6: Export Turnover of SVR 3L Rubber
(Source: Summary of Vietnam Rubber Association from data of Vietnam Customs)
Vietnam consistently increases its export of SVR 3L, a high-quality rubber grade, which commands a relatively high price due to its significant contribution to total export value Notably, 2010 was a pivotal year, with export value nearly doubling to over 1 billion USD The following years, 2011 and 2012, also experienced an average volume increase of 14% compared to previous years However, in 2012, despite a substantial rise in export volume, the overall export value saw a decline.
This is in accordance with a decreasing trend in rubber price around the world in
2.1.2.3 Export market of SVR 3L rubber
Table 2.7: Main Rubber Grades of Vietnam exported to major market in 2012
Market SVR 3L SVR 10 Compound SVR CV50/60 RSS 3 Latex (100%) SVR 20 Total
The SVR 3L grade rubber is exported to 60 countries, with China dominating the market at 59.2% Following China, India accounts for 10.1% of the exports, while Taiwan holds a share of 6.3%.
Compound rubber accounts for 10.7% of Vietnam's total exports, with China being the primary market, holding a 64.4% share, followed by Malaysia at 35.3% Malaysia imports Vietnam's compound rubber temporarily and re-exports it to China to benefit from a zero tax rate, significantly increasing its share of Vietnam's total compound rubber exports in recent years For instance, Malaysia imported only 7,144 tons of Vietnam's SVR 3L rubber in 2011, but this figure surged to 20,164 tons in 2012.
SVR 10 rubber is exported to 52 countries 2 main export countries of this grade are Malaysia (49.7%) and China (20.8%)