S&P Forecasts Flat Demand to 2050

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S&P Forecasts Flat Demand to 2050
Aerial view of traffic in the city of Madrid, Spain. ©samoila ionut

LISBON, Portugal – The global lubricants market will stagnate through 2050, with sluggish demand for transportation lubricants estimated to fall 1.1% per year on average, S&P Global told an industry conference here this month. An official with the firm said demand for passenger car motor oils will be especially hard hit.

The New York-based market research agency found that car parcs in Europe, North America and parts of Asia will shift largely to electric vehicles, causing long-term reductions in demand for light-duty vehicle lubricants but making little impact on motor oils used in heavy-duty vehicles.

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“The demand for transport lubricants is projected to peak in 2033, leveling off thereafter,” S&P Executive Director for Oil Markets John Leavens said Nov. 16 at ACI’s European Base Oils and Lubricants Summit. “Annual average volume growth in this segment is projected at 0% over the period of 2022-2050.”

He added that global demand for heavy-duty engine oil is projected to grow an average of 0.4% annually over the same period, supported by growing economic activity.

The report cites data by IHS Markit and covers passenger car and heavy-duty motor oils as well as marine and other types of oils as transportation lubricants. After a merger earlier this year, IHS Markit is now part of the S&P Global.

Global demand for automotive lubricants is projected to peak in 2033 at around 26 million tons per year and then to decrease to 24 million t/y by 2050, Leavens said. The firm predicts that passenger car motor oil demand will fall an average of 1.1% per year through 2050, “held back by lengthening drain intervals, increasing vehicle efficiency, increasing uptake of hybrid and fully electric light-duty vehicles [passenger cars and vans], and changes in consumer behavior.”

S&P forecast that demand for industrial lubricants will grow “slowly higher as new practices and technologies moderate the upward potential.” It estimates those two segments amounting to 14 million t/y in 2020 and that they will rise to peak at around 16 million t/y by 2050.

A variety of emerging trends and practices are converging to constrain lubricants demand growth in non-transport applications, according to Leavens.

“Advanced manufacturing techniques in the automotive and other sectors – such as 3-D printing, the use of composite materials, or minimum quantity lubrication – enable reduced lubricants consumption,” he said. “Meanwhile, product quality is improving as significant applications for Group II and Group III base oils are found in premium industrial oils where oxidation stability, low pourpoint characteristics, or low volatility characteristics are needed or valued.”

In Europe, demand for finished lubricants is projected to decline with passenger car motor oils seeing a slight decline due to the electrification. S&P predicts that the continent’s real gross domestic product and industrial production will grow by 1.3%-1.4% annually on average through 2050.

“After a strong lubricant demand contraction of 8.8% in 2020, Europe saw relatively moderate recovery in 2021, at 4%, as the region had to reimpose activity restrictions early in the year, before progress with vaccinations helped unlock economic growth potential,” Leavens said.

In the long term, Europe’s structural decline of lubricants consumption is projected to continue due to slowing economies, demographic changes, continued gains in lubricants efficiency, and a flattening out of growth in vehicle populations.

“Demand contraction will be strongest in the PCMO segment, which is projected to see volumes decline by 4.1% per year on average through 2050, due to strong EV adoption rates,” he said. “Europe’s industrial oils segment, which currently accounts for some 35% of the region’s total lubricants demand, will continue to play a sizeable role.”

S&P said penetration of fully electric and hybrid electric vehicles will reduce global demand for passenger car motor oils even though the global car population is expected to keep rising.

“By 2050, the PCMO demand displacement resulting from uptake of fully electric vehicles is projected at more than 35% of potential PCMO demand, while hybrid vehicle uptake is projected to displace an additional 6% of potential PCMO demand in the same timeframe,” Leavens said. “However, the demand from increased vehicle population and growth of EVs front-loads the automotive lubricant demand, for example by increasing first-fill demand.”

S&P predicts that the light-duty fleet will swell by over 35% to reach 1.95 billion by 2050. Battery electric vehicles will account for 42% of the fleet, hybrids for around 15%, while units powered by gasoline and diesel continued to account for around 30% and 10%, respectively.

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