A booming automotive market has pulled Brazils lubricant demand to sixth largest in the world, according to an IHS report published late last year.
Brazil now has around 30 million passenger cars, which is double the amount it had in 2000. According to IHS Chemical Special Report: Market Study, Lubricants in Brazil, the increase in passenger cars was paralleled by a 33 percent growth in finished lubes consumption since 2004. The country now consumes 1.2 million metric tons per year, which is around 3 percent of the world market. With global demand at 39 million tons, Brazils lube market is behind only China, the United States, India, Japan and Russia. Germany comes in behind Brazil at seventh largest.
Despite the increase in cars, Brazils motorization rate is low, the report points out. With just over five people per vehicle, there is plenty of room for continued growth, according to Guido Vildozo, an IHS Automotive analyst who contributed to the report. The conditions are right for more Brazilians to become new car buyers. Our outlook puts Brazils motorization rate at roughly 4 people per car in a five-year period, and [around] 3.5 people per car during the next 10 years. This explains why Brazil has become such a critical pillar of growth for original equipment manufacturers worldwide, and the same can be said for producers of lubricants that supply the automotive sector.
The automotive sector accounts for almost 70 percent of all lubricants used in the country, the report notes. This includes motor oils for gasoline, diesel, and flex-fuel engines, as well as greases, powertrain fluids and motorcycle fluids. [The] rise in economic activity propelled the lubricants market to new heights in Brazil, since automotive applications constitute a market of lubricant uses in the country, noted the reports author, IHS specialty chemical analyst Stefan Mueller, Ph.D.
There are still challenges to continued growth in Brazils lubricants market, however. Mueller pointed out that new, higher-quality products are necessary to meet looming air quality and fuel consumption regulations. Players in Brazil must decide between investing in new production plants and importing higher-quality products, he continued. Mueller believes that Brazils government will likely introduce incentives to encourage used oil recycling and rerefining – thus reducing the need for imported base oils.
Currently, more than 300 producers and distributors sell around 4,000 registered lubricant products in Brazil, the report concluded. However, 80 percent of the markets volume is dominated by nine players: Petrobras, Ipiranga, Cosan, Chevron, Shell, Petronas, BP, Castrol, Total and YPF. The report can be purchased at www.ihs.com.