Shell Still Biggest Lube Supplier


Shell remained the worlds largest supplier of finished lubricants last year for the 12th consecutive year, ahead of ExxonMobil, BP, Total and Chevron, according to a global study by Kline & Co.

Total and Chevron traded places compared to the companys 2016 rankings. Rounding out the top 10 were Chinas twin nationally owned petroleum giants, PetroChina and Sinopec, Japans Idemitsu, German independent Fuchs Petrolub SE and Russian oil company Lukoil. Sinopec and PetroChina swapped places with each other compared to Klines 2016 rankings, while Lukoil edged past JXTG Group into the 10th spot. The top 10 suppliers produced almost 50 percent of all finished automotive and industrial lubricants globally.

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Ranking 11th through 20th were JXTG Group, Valvoline, Gulf Oil International, Petronas, Pertamina, Indian Oil, Phillips 66, Gazpromneft, Rosneft and Hindustan Petroleum.

Kline also ranked the largest suppliers of synthetic and semi-synthetic suppliers, and Shell edged out ExxonMobil for the top spot there, too, with an estimated 14 percent of global demand for those products in 2017 on the back of its Shell Rotella, Pennzoil, Rimula and Quaker State products.

ExxonMobil itself accounted for just under 14 percent, while third-place BP had a 12 percent market share. The remainder of the top 10 consisted of Total, Chevron, JXTG Group, Fuchs, Valvoline, Idemitsu Kosan and SK Lubricants.

The top 10 suppliers accounted for approximately 60 percent of total synthetic and semi-synthetic lubricants volume last year.

Going Synthetic

Total global finished lubricant demand reached 40 million metric tons in 2017, and synthetic and semi-synthetic products accounted for nearly 50 percent of the global passenger car engine oil demand, Kline estimated, up from 33 percent of PCEO demand in 2015

For total finished lubricant demand, Asia-Pacific outpaced all other regions, with North America in second and Europe in third followed by the combination of the Middle East and Africa and South America in fifth.

The United States and China were once again by far the two largest lube markets. Kline ranked the U.S. first. What happens in the U.S. and China really sets the stage for market conditions going forward, said George Morvey, industry manager for Klines energy practice. Mexico overtook Canada to move into the slot for 10th-largest market, and Turkey jumped France to enter the top 15.

Passenger car motor oils, motorcycle engine oils, and heavy-duty motor oils combined accounted for more than 40 percent of global finished lubricant demand.

Were seeing that demand for high-performance, low-visgrade PCMO is accelerating in developed, and most importantly, developing countries, said Morvey. The top 20 country markets accounted for over 80 percent of total passenger car motor oil demand in 2017. I think these 20 are a good proxy for evaluating visgrade evolution over time, including the transition to 0Ws, continued Morvey. There will be a very rapid migration to 0Ws. Kline estimates that by 2027, SAE 0W oils will reach 24 percent of total demand, up from 8 percent in 2017.

SAE 15W-40 will remain the preferred visgrade for heavy-duty oils at about 45 percent of demand among the top 20 country markets, Kline predicts, leading to the minimal synthetic penetration potential. Those markets account for 73 percent of demand in that category. By 2027, Kline forecasts that the share for 10Ws will increase to 20 percent of demand, up from 11 percent last year. But a lot of this is country specific, said Morvey. For example in the U.K., theres much more demand for 10Ws. We see the U.K. reaching nearly 75 percent demand for 10Ws in its HDMO market by 2027, up from 27 percent in 2017.

Synthetic Demand

Global demand for finished lubricants is shifting toward synthetic and semi-synthetic oils, and the trend is expected to continue, David Tsui, project manager in Klines energy practice, said during an online webinar on Oct. 24. Fuel economy regulations, original equipment manufacturer recommendations and a growing number of synthetic product offerings are all contributing to the shift.

Europe edged out North America as the region with the greatest penetration of full- and semi-synthetics, with Asia-Pacific lagging behind but just ahead of South America, and Africa and Middle East bringing up the rear.

Kline projects that demand for synthetics will rise in every region during the next five years. European demand for synthetics will grow at a slight cost to semi-synthetics, driven by an increased recommendation of 0W grade oils by OEMs and increasing popularity of those products among the buy-and-bring customers. Asia-Pacific will see more 0W and 5W growth as countries implement Euro VI-equivalent emissions regulations. An increased number of synthetic product offerings will drive growth in North America, as well as new OEM specifications and rising fuel economy requirements.

In South America and Africa and the Middle East, Kline projects growth to come from sales of vehicles by premium OEMs that recommend synthetic lubricants.

The consumer automotive segment is shifting to synthetics faster than the industrial and commercial automotive segments. Commercial tends to be the most price-sensitive, so theyre the hardest to switch over from a conventional fluid to a synthetic or semi-synthetic, explained Tsui. However, he added, thats starting to change with new heavy-duty engine oil specifications and service categories.

Synthetic penetration of the heavy duty engine oil category swelled from 9 percent in 2015 to 10 percent in 2017. There is more price sensitivity as far as fleet owners mainly due to the volume of lubricants consumed, said Tsui. So when the sump can be anywhere from 10 liters to up to 20 gallons, a few dollars difference per quart or per liter on fluid can add up to a large difference.

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