Lube Industry Recovery Slows


LONDON – After rebounding strongly in 2010, the lubricant industrys recovery from the recession slowed in 2011, according to estimates from Fuchs Petrolub AG.

The planet consumed 35.1 million metric tons of lubes in 2011, Apu Gosalia, the companys head of global strategic marketing said Thursday here at the ICIS World Base Oils and Lubricants Conference. That was an increase of just 1.9 percent from 2010.

Last years unspectacular performance came after a year (2010) in which global demand rose 7 percent to 34.5 million tons. The recession had caused consumption to fall to 32.2 million tons in 2009, the lowest level since Fuchs began making global estimates 40 years earlier.

The estimate for 2011 remained 5.4 percent off the pre-recession peak of 37.1 million tons in 2007. Gosalia predicted that it will take years for the industry to fully recover.

We will not see the peak number of the years 2006 and 2007 again in the short term, he said.

Fuchs, which is based in Mannheim, Germany, is the worlds largest independent lubricant producer. Its estimates do not include bunker lubricants.

After the rise and fall involving the recession, the volume of lubricants consumed worldwide has not changed much from 2000, when Fuchs calculated demand to be 36.4 million tons, Gosalia said.

With a difference in lube consumption of just a little over 1 million tons between 2000 and 2011, one could think that not much happened over that time frame, Gosalia said. But in fact it did, if you look at changes in the underlying regional lube market dynamics, which were enormous in terms of quantity and quality.

In 2000, Asia-Pacific, the Middle East and Africa combined to account for 39 percent of worldwide consumption. By last year, their portion had swelled to 52 percent. The Americas share shrank from 34 percent to 28 percent over that same span, while Europes dropped from 27 percent to 20 percent.

Of course, China and India are primarily responsible for Asias ascendance. Gosalia showed China and the United States in a virtual tie for the largest lube market, with demand of 6 million t/y. India has moved into fourth behind Japan – both a bit more than 1.5 million t/y, Fuchs estimates – followed by Russia, Brazil and Germany.

Based on per capita lube usage, China has the potential to far surpass the U.S., Gosalia said. The U.S. has the worlds highest per capita rate of lube consumption at 20 kilograms per person. Chinas has increased in recent years, but its rate remains far lower, at 5 kg/person.

This shows the growth potential that lies in a country like China, although it will likely never reach the U.S. level of per-capita demand, Gosalia said. Instead, China is an emerging market which is starting to transition to a mature market, and a more probable model is to reach the overall lube appetite for Europe – which is around 9 kg per person. If we translate this to China, its total market someday will be around 12 million tons.

Gosalia predicted that regional trends in volumes and qualities of lubricants will continue for the foreseeable future. But he added that it is difficult to forecast global demand for the current year, primarily because of potential fallout should one or more European nations default on their debt.

With no solution yet found for the paralyzing euro zone financial crisis, the industry remains in a challenging situation, he said.

Related Topics

Market Topics