Asean Lube Demand Projected to Grow

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Asean Lube Demand Projected to Grow
Motorcycles stuck in heavy traffic at a checkpoint in Ciq Johor Bahru, Malaysia, that leads into Singapore. © nashriq mohd

Lubricant demand in nine major Association of Southeast Asia Nations countries is projected to grow by a compound annual rate of 2.1% to more than 3.5 million metric tons in 2027 and of 1.5% to nearly 4 million tons in 2032, boosted by industrialization and urbanization, as the region recovers and tries to reach pre-pandemic lube consumption levels, consultancy Kline & Co. projected.

“Between 2027 and 2032, [the Asean] lubricant market will witness a relatively lower growth due to increased penetration of electric two-wheelers in countries such as Indonesia and Vietnam,” Sushmita Dutta, a project manager in Kline & Co.’s energy practice, said during an online webinar held on Dec. 7. “Indonesia, Thailand, the Philippines and Vietnam are projected to add the most significant volumes to this market by 2032. Also, the market growth will be compromised due to the ongoing shift towards more advanced, longer lasting high quality synthetic products.”

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Kline’s analysis projected that Singapore will be the only country in the region that will witness contraction in its lubricant demand over the 10 year period. “During the next five-year period, Singapore’s automotive lubricant demand would grow, but industrial lube demand would decrease,” Dutta said. “However, after 2027, the country’s auto lube demand would be expected to decrease.”

The top three countries – Indonesia, Thailand and Singapore – accounted for about two-thirds of the region’s estimated 3 million to 3.5 million tons of lubricants demand in 2022, she said. The report analyzes in-depth the automotive and industrial finished lubricants markets in eight leading countries in Southeast Asia – Indonesia, Vietnam, Thailand, the Philippines, Malaysia, Myanmar, Cambodia and Laos – and also includes a short profile of Singapore’s lubricants market.

Kline estimated industrial lubricants consumption at 1.2 million to 1.4 million tons in 2022, with marine oils accounting for close to half of demand because of significant consumption in Singapore, Indonesia and the Philippines. The industrial lubricants segment led the market last year, she said, accounting for nearly half of the demand, which Dutta noted is essentially due to the huge demand for marine engine oils in Singapore.

The company estimated passenger car motor oil consumption at 400,000-500,000 metric tons last year. Of that, synthetic and semi-synthetic accounted for almost half. Dutta noted the improving quality of lubricants in the region, especially automotive lubricants. “The region’s lube quality level has traditionally been lower compared to more advanced countries,” she said. “However, Singapore has been an outlier, with a high share of high quality synthetic and low viscosity lubricants. We’re also seeing that other countries [in Southeast Asia] are seeing a gradual shift towards superior quality lubricants.” This transition is driven by original equipment manufacturer recommendations and by government’s emissions regulations, she noted, which is indirectly leading to vehicle parcs moving to higher quality lubricants. “OEMs are required to use more efficient vehicles, and one way of improving efficiency is using a longer lasting, low- viscosity lubricant,” she added.

Multigrades accounted for nearly all the viscosity grades for the PCMO consumed last year. She noted that 10W-30/40, 20W-40/50 and 15W-40 account together for more than 75% of such demand. They are followed by 5W-XX, 0W-XX and a very small portion of monogrades.

The company estimated heavy duty oil consumption at 600,000-700,000 tons in 2022. Of that, conventional lubricants dominated, accounting for more than 75% of demand. Semi-synthetic and a very small amount of synthetic demand accounted for the rest. Monogrades accounted for about 40% of the HDMO demand in the leading Asean countries, followed by 15W-40, 10W-30/40 and other types.

The company estimated the vehicle parc of the selected Asean countries at 300 million to 400 million units in 2022. Indonesia maintained its leading position, with close to 50% of the region’s vehicle parc, she noted, followed by Vietnam, Thailand, the Philippines and Malaysia.

Two-wheelers, due to lower ownership cost than cars, is the most used vehicle category in the region, accounting for more than 75% of the region’s vehicle fleet. Passenger cars and commercial vehicles account for the remainder.

Four of the top five suppliers in the key Asean countries last year were international oil companies, Kline found. Shell ranked first, followed by BP, Indonesia-owned oil company Pertamina, ExxonMobil and Chevron.