Asia-Pacific’s finished lubricant demand is projected to grow by a compound annual rate of 0.8% to 2032, with most of that growth occurring in the first half of that period – led by growth in India, South Korea, Indonesia and China – consultancy Kline & Co. projected.
The region remains the largest lubricant market globally, thanks to China and India, the second and third largest lubricant markets, respectively, Sushmita Dutta, a project manager in Kline & Co.’s energy practice said during a webinar on Wednesday. “In this region, demand is going to grow a at CAGR of 1.5% between 2022 and 2027, and after that will remain more or a less stable” out to 2032, Dutta said.
Kline estimated overall global finished automotive and industrial lubricants demand declined 2% to 39 million metric tons in 2022, compared to 40 million tons in 2021, remaining below the pre-pandemic 41 million tons demand in 2019. The webinar, “Annual Review of the Global Lubricants Market,” was based on insights from the company’s “Global Lubricants: Market Analysis and Opportunities” report.
Dutta noted that COVID-19 had a detrimental impact on the global lubricants market, causing demand to go down in 2019. It then recovered to 40 million tons in 2021, but demand did not recover to the pre-pandemic level in 2022. “This happened because in many markets we saw the demand went down in year 2022, especially in Europe and In China, for different reasons,” she said. “Looking forward, the outlook is positive.” Most of the markets are likely to grow out to 2027 and 2032, except Europe, where it is expected to remain essentially flat.”
Out to 2027, Kline projects China’s CAGR will top 1%, led mainly by around a 2.5% CAGR for industrial lubricants and a near 1% growth rate for consumer vehicle lubricants. This is expected to be offset slightly by a slight decline in commercial vehicle lubricant demand, she added.
“What’s interesting about China is in the year 2022, the country saw a double digit [percentage] decrease in its lubricants consumption, and the reason again was a resurgence in COVID cases, strict lockdowns and mobility restrictions, and restrictions on businesses,” Dutta said. “But going forward it is going to be growth, especially demand in 2027 compared to 2022. However, I would like to mention in China because of the demand decrease in year 2022, it will recover quickly in the year 2023 – that’s the expectation. Between 2023 and 2027 there could be a slight decrease. The demand will correct its course and will not continue to grow very fast after 2023.”
In Asia-Pacific, Dutta noted, Japan stands out because it is the only country that is expected to see its lubricant demand shrink over the next five years. “The automotive sector will see a significant decline because of electrification of the transportation sector,” she said. Another factor at the same time will be the increasing usage of 0W engine oils and full synthetic lubricants recommended by some of the leading original equipment manufacturers that are in Japan.
She added that similar to Japan, South Korea will also see its consumer automotive demand shrink because of the vehicle electrification trend, with a 1% compound annual decline projected out to 2027. However, its overall lube demand is expected to grow by a more than 2.5% CAGR, with higher 3% growth rates for consumer and commercial lubricants demand.
According to Kline, India and Indonesia are the bright spots in terms of stronger projections for lubricant demand growth to 2027.
“They will continue to grow despite the electrification of the automotive parc,” Dutta said. Over the time frame, Kline projects India’s consumer lubricants demand will grow by a CAGR of close to 3.5% and the commercial, industrial total lubricant demand to grow at CAGR’s close to 3%. Indonesia’s lubricant demand CAGR is projected to grow at around 2.5% over that time.
Although Kline found that developed nations in North America and Europe have a higher share of synthetic passenger car motor oil demand compared to those in developing regions of Asia-Pacific and South America, synthetics are making strong inroads in several key Asia-Pacific countries.
Dutta noted that South Korea was the country with the highest share of full-synthetics in 2022. Conventional accounts for less than 10% of the country’s PCMO demand. Only the United Kingdom had a higher combined share of synthetics and semi-synthetics.
She pointed out PCMO quality is improving in other key Asia countries – including China, India, Thailand and Indonesia. The combined share of full synthetic and semi-synthetic now accounts for the majority of such demand in China, India and Thailand. That combined share is also making progress in Indonesia, although it accounted for less than half of PCMO demand there in 2022. “So it’s not a predominately conventional market, even in many Asia countries,” she added.
On the heavy-duty motor oil side, Dutta explained the share of synthetics remains low globally because commercial fleets are price-sensitive. “They exhibit reluctance in switching to synthetic products especially if the vehicles are very old, are used a lot, and they change their oil frequently, so they’re not easily persuaded to move toward synthetics.”
The Asian market remains predominantly a conventional HDMO lubricants market, she pointed out, noting that conventional has a significant share in China, Thailand, India and Indonesia. Full synthetics have made inroads in South Korea, although Kline estimated that HDMO type still accounted for substantially less than half of the market there last year.
Kline estimated that the top five lubricant suppliers in 2022 were Shell, ExxonMobil, BP, TotalEnergies and Chevron. The rest of the top 10 included China’s Sinopec and PetroChina, Fuchs, Japan’s Idemitsu Kosan, and Valvoline.