Synthetics Forecast to Lead Asia-Pacifics Lube Growth

Asia-Pacific's synthetic lubricants demand will expand at a compound annual rate of more than 6 percent to 2020, with Japan and South Korea leading the region in market penetration, according to consultancy Kline & Co. Semi-synthetics' CAGR is expected to be nearly 9 percent.

By contrast, conventional lubricants demand is expected to shrink at a compound annual rate of almost 1 percent to 2020.

Globally, Kline estimates synthetics penetration will expand from 17 percent of the 38.8 million metric tons of total global lubricant demand in 2015 to 22 percent of the 40 million tons forecasted for 2020, despite low to no volumetric growth. Synthetic lubricants penetration in the passenger car motor oil market reached 33 percent in 2015, up from 29 percent in 2013 despite low or no volumetric growth. The estimates exclude synthetic process oils.

Key factors driving adoption of synthetic lubricants globally include original equipment manufacturer technical demand, supply push of base stocks such as API Group III, increasing consumer awareness and acceptance, government emission and fuel economy regulations, affordability and economics due to extended oil drain intervals and continued end-user loyalty.

South Korea and Japan continue to be the leading country markets in terms of synthetic penetration, but we do see [in] China and India in particular, rapidly advancing…demand [for lower viscosity grades], said George Morvey, industry manager for Kline & Co.s Energy Practice, during a Nov. 22 webinar. In India, for example, there is a very rapid move from heavy visgrades like 15Ws, right down to 5Ws. So rather than a long evolution that we see in mature country markets like the United States, for example, India is leapfrogging viscosity grades, moving very rapidly to lower visgrades.

Kline found heavier penetration of semi-synthetic lubricants in a variety of markets, including countries in Asia-Pacific, South America, Africa and the Middle East. We are seeing the formulations used almost as a bridge type of product to introduce consumers to the benefits of these products, he said. Its a little bit more affordable, a little easier to sell. He noted that marketers hope customers will eventually make the transition to using a fully synthetic product.

He noted that consumer awareness and acceptance of synthetics is still low in the region. I think industry has work to convince consumers about the benefits of synthetics, whether thats longer oil intervals or better fuel economy, Morvey said. There are opportunities in Asia-Pacific to change consumer perception, to build awareness and acceptance.

He explained that the Buy and Bring engine oil change is quite common in some country markets, especially in China and India, where there is a high proliferation of counterfeiting. One way consumers can overcome that is they will buy product at retail, either from established retail or online sales, and then bring product to an installer. They will pay someone and watch someone change the oil - especially if using a synthetic - to ensure they are getting what theyre paying for.

Klines list of top 10 global suppliers by market share for synthetic and semi-synthetic automotive and industrial lubricants included two from Japan: JX Nippon in sixth place and Idemitsu in seventh. ExxonMobil ranked first, followed by Shell, BP, Total and Chevron.

The study was titled Global Synthetic Lubricants: Market Analysis and Opportunities.