Mexicos lubricant demand grew about 2 percent in 2013, industry insiders say, and that plus market liberalization have been enough to attract increased attention from some suppliers.
It also helps that the nation is a large lube market, with demand of 690,000 metric tons in 2013, according to estimates by Kline & Co. The U.S.-based consultancy said that represented a 2-percent increase over 2012. Mexicana de Lubricantes, a blender based in Guadalajara, Mexico, estimated that demand grew 1.8 percent in 2013. Kline said the value of that 2013 demand was U.S. $1.9 billion. Thirty-five percent of the total demand volume goes into consumer automotive applications, 34 percent into heavy-duty trucks and 31 percent into industrial applications.
In 2012 Mexico passed legislation that opened its energy sector to private firms to curb the monopoly of state-owned company Petroleos Mexicanos (Pemex). In the lubricants market, the regulation permits suppliers to set up blending plants and determine where products can be sold.
Two Japanese lubricant suppliers opened sales offices in Mexico the past two years – Idemitsu Kosan in 2013 and JX Nippon last November. Idemitsu officials told Lube Report recently that its been pleased by its progress.
We have been able to meet our sales target and [were] able to reach the 7,000-kiloliter milestone in sales volume [this year], said Mario Perez, general manager for Idemitsu in Mexico.
Idemitsu has a growth agenda in Mexico, and such growth will dictate the required investment level that has to be done in order to support it.
Idemitsu and JX Nippon both base their business models partly on a strategy of allying with Japanese automakers and supplying lubes for factory fill and aftermarket replacement. And indeed a number of automakers have invested in Mexico in recent years.
There has been a lot of activity recently, as new projects are intensifying [since 2013], with companies like Kia, Audi, JX Nippon and Idemitsu investing in Mexico, Victor Franco Paredes, operations director for Comercial Roshfrans, told Lube Report. I think the [lubricant] market in Mexico will continue to grow, though there are several factors that may influence the market so that it can continue to take small steps forward and reach the 2 percent growth.
Kline believes the liberalization of the lubricant market is one factor that has and will continue to draw oil suppliers, but not everyone sees it that way. The lubricants market has always been open, probably since the late 19th century, Shell Lubricants President and CEO Colin Abraham said in a recent e-mail exchange. He allowed that the lubricants market may have been impacted by the reforms of the broader energy sector insofar that it may have drawn more interest in fuel retailing, which can serve as a sales channel for engine oils.
Still, Shell, which has been in the market since 1954, agrees that Mexico is attractive. Given that Mexico is one of the largest markets in Latin America, it will very likely remain interesting for lubricants marketers, Abraham said.
Some companies are less optimistic about prospects in Mexico, including Mexicana de Lubricantes, which is commonly known as Mexlub or by the brand name Akron.
There is always an opportunity to grow, said Hugo Jesus Ochoa Reyes, the company’s director of marketing. The opening in the energy sector will allow us to have more and different types of product penetration. But he added that the market is very mature and noted that his company estimates that demand shrank 1.7 percent in 2014. The market is stable, and we dont see much volume growth now.