Lubricant demand in the Asia-Pacific region is projected to rise 3.3 percent annually, reaching 19.5 million metric tons in 2019, according to a new study published by Freedonia Group.
Emily Park, an analyst with the United States-based market research firm, said the region is expected to remain the fastest-growing regional economy through 2019, and that demand for lubricants will continue to rise due to further growth in the economies that make up Asia-Pacific. But she added that growth for the regional industry will be slower than the past 10 to 15 years.
The slower growth is partially due to the maturation and modernization of the economies and manufacturing sectors, which in many cases will expand at a more moderate pace going forward, Park told Lube Report Asia. Lubricant demand growth will also be restrained by industrial modernization, which will increasingly lead to the more efficient use of lubricants, particularly of more advanced lubricants with longer drain intervals.
According to Freedonias forecast, lube demand in Asia-Pacific will continue to outpace other markets even after its slowdown. By 2019, the firm expects global lube demand to reach 45.4 million tons and Asia-Pacific to account for 43 percent of that total.
Some countries that are expected to see growth include China which, despite its economic slowdown, is projected to have an average annual demand increase of 4.1 percent through 2019. Growth rates forecast for other countries include 4.6 percent for India; 3.8 percent for Indonesia; 3.2 percent for Thailand; and 1.2 percent for South Korea.
Lubricant demand in Japan, Park added, is expected to decline through 2019. In addition to many of the same factors impacting the markets in the U.S. and Western Europe, Japan is also projected to see slower growth in the number of motor vehicles in use, modest gains in manufacturing output and declining motor vehicle production, she said.
Some analysts are less bullish than Freedonia about the industrys outlook. Apu Gosalia, vice president of sustainability and global competitive intelligence for Fuchs Petrolub SE, contended that growth in Asian markets will be less than Freedonias forecast.
I think 3.3 percent as an average annual growth rate until 2019 is too high for Asia-Pacific, he said. The region includes Japan, South Korea and Australia - all fairly large mature lubricant markets that are essentially flat or have been even declining in the past years. China and India cannot make up for that, and as we have learned in the past two years, with those two countries lube demand growth rates are not the same as five to 10 years ago.
Geeta Agashe, president of U.S. consulting firm Geeta Agashe & Associates, agreed with Freedonias prediction that further industrialization will bring Asia-Pacific to use more efficient lubricants, which will dampen the markets growth in that region. But like Gosalia, she maintained that Freedonias forecast for global demand is too optimistic.
World [gross domestic product] is only forecast to grow by 2 percent to 3 percent depending on the forecasting agency, she said, noting that lubricant demand growth typically lags GDP. She predicted that global lubricant demand will stagnate.
Gosalia added, I dont think are we going to see 2 percent growth on a global basis, he said. Asia-Pacific may continue to grow but not enough for the global market to grow that much when you have large markets like Europe and North America that are flat or getting smaller.
Freedonia expect demand in Asia-Pacific for bio-based lubricants will grow faster than overall lube demand there, thanks to emerging support for environmental protection. The firm did not that volumes for bio-based products are small today. It also expects the regions demand for bio-based lubes to increase at average annual rates between 6 percent and 7 percent.
Synthetic lubricants are also projected to see growth in Asia-Pacific. For example, as the motor vehicle park expands, newer vehicles, which increasingly require the use of synthetic lubricants, will account for a growing share of lubricant consumption. Additionally, the further development of the region's manufacturing industries - particularly those geared toward export markets - will necessitate the use of improved lubricants, said Park.