Kline: Global Demand Recovered in 2021


STUTTGART, Germany – Global lubricant demand jumped 8.3% last year, recovering most of what the market lost during the first year of the COVID-19 pandemic, an official from Kline & Co. told an industry conference here today.

The consulting firm estimates the world consumed 39.9 million metric tons of lubes in 2021, including process oils, Milind Phadke, vice president of energy market research, said at the Uniti Mineral Oil Technology Congress. Kline previously estimated global demand at 36.4 million tons in 2020 and 41 million tons in 2019.

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The coronavirus crisis was the biggest blow to the lubricants industry since the Great Recession, which caused demand to fall 12.1% in 2008 and 2009.

The industry faces new challenges in terms of demand, however. Phadke said impacts from the shift to electric vehicles are coming on at an accelerating rate. Plug-in hybrid cars have both electric and internal combustion engines, but vehicles running purely on battery have only the former and therefore do not use engine oil, by far the largest product category in the industry.

The ramp up in sales of both categories of EVs continues to outpace projections, and Phadke noted that governments are adopting regulations and resolutions that would push the transition even faster.

“The impact of electrification in the short- to mid-term will be felt most acutely by passenger car motor oils,” he said. “Successive regulations make the forecast more and more pessimistic. For example, last year the [European Union] proposed ‘Fit for 55,’ requiring 100% electric vehicle sales by 2035. The regulation was approved by EU parliament in June 2022.”

As a result, Kline has accelerated its projection for the erosion that EVs will cause to global passenger car motor oils demand, which it pegged at 7.2 million tons in 2019. The firm now predicts that the category’s volume will peak in the next few years and then fall by between 23% and 35% by 2040. Phadke said this will have a significant impact on demand for API Group III base oils.

Phadke predicted a similar impact on global demand for engine lubricants used in two-wheelers, including motorcycles, scooters and mopeds. Two-wheelers are transitioning to electric models faster than passenger cars, he said, and Kline forecasts that consumption of the motorcycle oils they use will fall between 12% and 34% by 2040. The firm estimates demand was 1.5 million tons in 2020.

The COVID-19 pandemic caused global consumption of finished lubricants to fall 10.9% in 2020 to 36.4 million metric tons, according to a new study released by Kline & Co. consultants.

That puts the coronavirus’ impact on the industry on a similar scale to that of the Great Recession. According to previous Kline estimates, that economic crisis caused at 12.1% decrease in global lube demand over two years – from 39.8 million tons in 2007 to 35 million tons in 2009.

In a news release yesterday about its study, Global Lubricants Market Analysis and Assessment, Kline said major lubricant markets are emerging from the COVID-19 crisis, adding that “signs of stability, recovery, and a return to normal consumption patterns are taking hold.” It offered no estimates of lube consumption in 2021.

The firm, which is headquartered in Parsippany, New Jersey, United States, said demand in China and India fell 12.9% and 10.9%, respectively, in 2020. The U.S., which along with China is one of the world’s two largest markets, shrank by an estimated 9.7%, Kline said.

In a coordinated news release, energy giant Shell said the Kline’s study found that it remained the world’s largest lubricant supplier with sales of 4.1 million tons in 2020. That represented a decrease of 8.9% from 2019. Shell added that it is the largest supplier in terms of volume for each segment of the global industry – consumer automotive, commercial automotive and industrial. Those segments account for 34%, 30% and 36%, respectively, of its own sales.

Kline said that the next-largest suppliers after Shell are ExxonMobil, BP, TotalEnergies and Chevron and that collectively the five companies supply 35% of global lubricant demand.

Lubricant businesses took a variety of steps to try to cope with declining demand, and Kline said some allowed companies to increase market share. In China, where online purchases of passenger car motor oil are booming, some marketers established their own online stores on internet sales platforms such as JD.com and Tmall.com. Some companies allied with online-to-offline aftermarket service providers to establish new sales channels.