Russia’s lubricant market had a healthy year in 2018, thanks to positive macroeconomic indicators and developments in the industry and national economy, according to an industry insider.
Last year, Russia’s finished lubricant demand rose 1.2 percent to 1.56 million tons, a significant uptick compared to the almost stagnate market in 2017 (just 0.2 percent growth from the year prior) and a 3.9 percent decrease in 2016, Roman Kuzmin, Gazpromneft-Lubricants’ deputy general director for operational marketing, told Lube Report last week.
“The country’s economy is gradually recovering from the turbulent years of 2015 and 2016, which caused the country’s lube demand to contract 8.5 percent over the two years combined,” Kuzmin said.
“The main drivers of this revival are the macroeconomic indicators and upward trends in industry, and in the national economy, which need a regular supply of large volumes of lubricants,” he continued. Russia’s gross domestic product growth rate was 1.8 percent in 2018. “We experienced positive developments in the metallurgy, machine building and mining sectors. All of them demand a great deal of lubes. In all, the industrial lubricants demand reached 780,000 tons in 2018,” he explained.
As the national economy increased 1.9 percent in 2018, and transportation of goods became more active, analyses have shown that commercial vehicle and machine lubricant demand in the transportation sector reached 490,000 tons in 2018, he reported. “The company found that passenger car motor oils have also shown [a] positive result with 2.7 percent growth in 2018 compared to the year before,” Kuzmin added.
New car sales grew 15 percent in the first nine months of 2018. “The longer mileage driven, growth of taxi vehicles and car sharing fleets and the deferred car demand have all contributed to almost 290,000 tons of motor oil demand in Russia,” he said.
As a result of the entry of international marketers such as Shell, Total and Fuchs with their manufacturing operations in Russia, overall imports of finished lubricants in the country has been reduced, Gazpromneft-Lubricants found.
“This is related with the foreign brands urge to be more price competitive when local counterparts are aggressively flooding such sectors as specialty lubricants for new technologies, as well as industries that use modern equipment, while the Russian consumers recover their purchasing powers,” Kuzmin said.
He predicts the country’s lube market will continue to grow in 2019. “We expect an average growth rate of 1.8 percent this year with passenger car lubes growing the same as in 2018. Improved demand in the commercial and industrial sectors [makes for] expected growth of up to 2 percent in 2019,” he postulated.