India Market Still Growing

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India Market Still Growing
Traffic on a Dombivali-Kalyan highway near Mumbai, India. © Manoej Paateel

SINGAPORE – Lubricant demand in India, the world’s third-largest market, has grown to 3.11 metric tons per year and will continue expanding, a Hindustan Petroleum Corp. Ltd. official said during the ICIS Asian Base Oils and Lubricants Conference here this week.

“India is an energy starved country with a population of 1.4 billion, and the population is increasing,” HPCL Executive Director for Lubricants Sanjay Kumar said on Thursday. “It has 2,700-plus players [in the lubricant market] and 1,000-plus grades of lubes and greases, 1,200-plus additives and 50-plus grades of base oils.

“Eighty percent of movements are still on the road, and they consume a lot of lubricants, and India has a huge coastline. The government will be adding highways and roads to connect all the ports.”

He predicted that demand will grow fastest for lubes associated with personal on-road mobility.

“Bet on motorcycle oil and passenger cars motor oil as more cars are coming onto the road,” Kumar said. “India added about 4 million cars last year, and shared mobility is being converted back to personal mobility after the COVID-19 pandemic.” Sales of two-wheelers last year reached around 19 million units, according to the Society of Indian Automobile Manufacturers.

India’s total vehicle parc is 308 million. Two-wheelers account for most of that number at 242 million or 79%, followed by passenger cars with 46 million or 15%, commercial vehicles with 12 million or 4% and three-wheelers with 8 million or 3%, and commercial vehicles with 12 million or 3.9%, Kumar said, citing data from the Centre for Monitoring Indian Economy, a Mumbai think tank.

“Tractor is a hungry market, and there is a huge demand, and the demand is increasing like anything,” he said. “Another sunrise sector.”

Automotive lubricants account for 31% of current lube demand in the country, according to HPCL, while process oils and industrial lubricants make up 31% and 25%, respectively. The automotive segment breaks down to 7% factory fill and 37% replacement fill, and within the latter category 29% are automotive lubes sold through the bazaar or retail outlets, while 8% is supplied by workshops.

Kumar predicted that passenger car motor oils will be the fastest-growing product category at compound annual rate of 6% from 156,000 tons per year in 2023-2024 to 221,000 t/y in 2029-2030. Motorcycle oils and heavy-duty motor oils are both forecast to grow at a 2% clip over that period, the former 334,000 t/y and the latter to 537,000 t/y.

Combined sales of hydraulic and transmission oils are forecast to grow at a compound annual rate of 4% to 249,000 tons, gear oils at a rate of 2% to 179,000 tons and greases 75,000 tons to 90,000 tons.

He emphasized, however, that the market is demanding new types of lubricants to meet the evolving mix of fuels that are used – for example, ethanol blended fuels such as E20, and E100, which was launched in March this year. He added, “Compressed natural gas is a [dawning] industry, with 6,500 CNG stations [now existing] and the plan is to have 17,500 stations by 2030. If that happens, it means more and more CNG vehicles.” said Kumar. Domestic sales of CNG vehicles more than tripled in 2023-2024 to reach 1 million units, according to CMIE.

Demand for industrial lubes is also expected to grow. HPCL forecasts electrical transformer fluid demand is to grow at a compound annual rate of 1% to 504,000 tons in 2029-2030, white oil sales to increase at a 1% rate to 328,000 tons and industrial grease at a 3% rate to 72,000 tons. Demand for metalworking fluids is forecast to remain at 145,000 t/y and rubber processing oils is expected to drop decrease at a 3% clip to 183,000 tons.

Kumar said he does expect electric vehicles in India to overtake internal combustion engines anytime soon. Vehicles running on conventional fuels accounted for 89% of vehicle sales last year. “The majority of EVs are manual rickshaws, and there are about 13 million of them,” he said. “They use brake oil, coolants, transmission oils.”

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