Rebound Forecasted for Asia-Pacific


Rebound Forecasted for Asia-Pacific

After two consecutive years of decline, lubricant demand in the Asia-Pacific region should rebound to grow at a compound average annual rate of 0.9 percent to reach 17.7 million tons in 2021, an official from Kline & Co. consultants said last week.

The consultancy expects the regions lubricant additive demand to increase by a compound annual rate of 1.1 percent to 1.8 million tons during the same period.

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Changing passenger car warranty policies set by the government and ride sharing have a major impact on lube demand in Asia-Pacific.

Asia-Pacific has grown to become by far the worlds largest lubricant consuming region, but the market shrank 0.8 percent each year between 2014 and 2016, due in part to poor economic conditions and a decline in Asia-Pacific manufacturing and exports, David Tsui, project manager at Kline, told Lube Report Asia in an interview following an Oct. 18 webinar about the lubricant additive market.

China is by far the largest lubricant market in the region – and the second-largest in the world – but economic growth there slowed to a scant 1.2 percent in 2016, according to Trading Economics. This led to consolidation in industry, which according to Tsui will affect lubricant purchasing patterns. More lubricants will be purchased centrally than before, which could shift some sales tactics and benefit global lubricant suppliers over local blenders, he said.

However, the regions lubricant market has been recovering quickly, he noted. One of the main factors is the Chinese governments 13th Five-Year Plan, which involves shifting their economy from a low-cost, export-driven market towards a higher value-added goods and services economy, as well as promoting international consumption and sponsoring major infrastructure projects.

Tsui believes that economic recovery in the region, a major increase in the passenger car parc and steady gross domestic product growth are the driving forces in the lubricant additives market.

Dispersants are the leading additive class because of the high demand for heavy-duty and passenger car motor oils in the region. Currently, Asia-Pacific accounts for over 40 percent of global heavy-duty oil demand.

The trend towards higher quality oils, which is leading to more complex additive formulations, is likely to shift demand away from smaller local blenders, who currently lack know-how, towards global brands that have the technology and resources to develop modern products, predicted Tsui. He expects Asian companies will catch on to the changes quickly, however.

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Additives    Business    Finished Lubricants