MUMBAI, India – The outlook for industrial lube demand in India is positive, thanks to government initiatives aimed at boosting manufacturing activity and infrastructure development, said Ravi Chawla, managing director of Gulf Oil Lubricants India Ltd.
Im pretty optimistic with what the government is doing today, Chawla said at the Asia, Middle East and Africa Base Oil, Lubricant and Wax Conference on July 13.
The Make in India initiative aims to make the country a global manufacturing hub by encouraging foreign and domestic investment in sectors such as automobiles, chemicals, shipping, mining and railways.
The Smart Cities Missions goal is to make 100 cities across the country more economically viable, citizen friendly and sustainable through infrastructure improvements.
The Indian government is also developing six industrial corridors with industrial cities across various regions of the country.
In addition, the government launched the Ujwal Discom Assurance Yojna (Uday) scheme for reviving debt-ridden, state government-run power distribution companies, with the goal of bringing more electricity to rural regions.
India also set an ambitious target of constructing 15,000 kilometers of national highways by the end of the current financial year, which ends March 31, 2018.
Revival in manufacturing output and pick-up in general industrial activity in the country will drive the growth of industrial lubricants demand in India, Chawla told attendees of the conference, which was jointly organized by market intelligence agency Petrosil Group and consultancy Rex Fuels Management Pvt. These are the things that will pep up the economy and will really drive the lubricant demand.
Gulf projected the countrys industrial lubricant demand to grow at a compound annual rate of 1.6 percent from 2016 to 2020, Chawla said, adding that the same rate applies to the period from 2013 to 2023, according to United States-based consultancy Kline & Co.
Electricity generation accounts for 27 percent of Indias approximately 620,000 metric ton industrial lubes market. Chemicals production makes up 22 percent; metals and automobile manufacturing each take 10 percent shares; transportation applications account for 9 percent of demand; mining 2 percent; and other applications collectively hold 17 percent.
Industrial engine oils were the most-demanded industrial oil type at around 25 percent of the segment, according to Kline. General industrial oils, metalworking fluids and hydraulic fluids followed in a three-way tie for second place with shares of around 21 percent each. Industrial grease made up 6 percent of the market, and other types of oils collectively rounded out the remaining 5 percent.
Market penetration of synthetic and semi-synthetic lubricants in industrial segments is around 6 percent, he added, noting that the volume of synthetic industrial oil volumes will crawl up at an annual growth rate of around 4.6 percent from 2016 to 2021. Semi-synthetic industrial oil volumes will expand at an average rate of 2.5 percent per year during that period.