Global lubricant demand will grow at less than 2 percent per year to reach 42.1 million metric tons by 2017, consultancy Kline and Co. projected, from 38.7 million tons in 2012.
George Morvey, industry manager for Klines Energy Practice, said during a recent webinar that Shell remained the global market share leader at 12 percent, followed by ExxonMobil at 10 percent, BP with 7 percent, and Chevron and Total at 5 percent each. The rest of the top 10 included PetroChina at 4 percent, Sinopec with 3 percent, and Idemitsu, Lukoil and Fuchs at 2 percent each. Fuchs entered the top 10 for the first time.
According to Klines study, Global Lubricants Industry: Market Analysis and Assessment, lubricants demand will grow annually from 2012 to 2017 by 2.7 percent in Asia Pacific, by 2.4 percent in South America, by 1.4 percent in Africa and the Middle East, by 0.6 percent in Europe and by 0.4 percent in North America.
Asia-Pacific led the market in 2012 with 43 percent of finished lubricants consumption. North America was next with 25 percent, and Europe with 17 percent. The remainder included Africa and the Middle East together at 8 percent, and South America with 7 percent.
Among individual countries, the United States remained the leader with just under 22 percent of the global market. The U.S. continues to lead in terms of overall lube demand, but we are contracting in terms of our demand, Morvey said. There are still issues trying to recover from recession, increasing the penetration of synthetics, fewer miles driven and longer oil drain intervals – all of these things combined have resulted in shrinking of lube demand.
China consumes almost 20 percent of the worlds lubricants now, and is expected to take the top spot globally in the 2015 to 2016 timeframe. India is third with more than 5 percent of the global market. Russia passed Japan to become the fourth largest country market, with each country having less than 5 percent of the market.
In China, the government is trying to develop a consumption economy rather than an export economy, Morvey pointed out. People are still buying cars, theyre still driving. Its the same with India. Despite the misfiring of those two country markets, we still see fundamental drivers in place. Demand will resume growth over the forecast period, albeit at much lower growth rates than prior.
Growth in South America, and in Africa and the Middle East is driven primarily by commodity exports to Asia and domestic consumption, he said. The slowdown in China trickled down to country markets in South America and AME that were sending commodity exports to China. The fundamentals are in place there, albeit at lower growth rates.
In Europes lubricants market, Eastern and Central Europe are key, he noted. Growth in Russia, Ukraine, Turkey, Romania – countries like this will counter declines in western Europe, Morvey said. Despite whats happening in Italy, France, Spain and Greece, we do see positive drivers in Eastern and Central Europe. Although like South America and Africa-Middle East, a lot of these country markets are exporting products into Western Europe, so if theres a decline in Western Europe, it trickles back into Eastern and Central Europe.
Looking at the break down of global demand by lubricant types, heavy duty motor oil led with 23 percent of global lubricant demand in 2012, followed by passenger car motor oil at 18 percent. We do see oil drain intervals are increasing in certain country markets, regardless of usage levels, he said. In the U.S., fleets for example are looking to optimize oil drain intervals to keep vehicles and equipment out on the roads rather than in the shop. In different country markets – depending on the level of sophistication, age of the fleet, and best maintenance practices – they may not be following extended oil drain intervals.
Other automotive-related lubricants, such as automatic transmission fluid, automotive gear oil and tractor hydraulic fluid, account for another 12 percent of global demand.
On the industrial side in 2012, process oil – a category where Kline includes products such as transformer, rubber, white oils and printing inks – led with 15 percent of total global lubricants demand.
Other industrial products include hydraulic fluids at 9 percent, general industrial oils – such as industrial gear oils, turbine oils, compressor and refrigeration fluids – with 8 percent, industrial engine oils at 7 percent, metalworking fluids at 5 percent and grease at 3 percent.
Kline projects synthetic lubricants will grow at an annual rate of about 4.5 percent over the next 10 years, albeit from a small base.