While the United States remains the largest country market for finished lubricants, its overall growth is underwhelming, according to a webinar presented by Kline & Co. last week.
The consultancys annual assessment of the global lubricants industry put the U.S. ahead of China in lubricant demand, accounting for 20 percent of global demand and 84 percent of demand in North America during 2014. However, said George Morvey, industry manager for Klines Energy Practice, we are essentially a flat country market.
Over the next five years, Kline expects a slight decline in the growth of U.S. consumer demand and meager growth, if any, in the industrial and commercial market segments. We really dont see significant movement at the overall top level in the U.S., said Morvey. In contrast, China is expected to show a marked increase in all three segments.
Change in the U.S. market is taking the form of a shift rather than significant growth or decline. Bubbling below the surface we do see a movement to more synthetic and semi-synthetic penetration in the U.S., primarily in passenger car motor oil, said Morvey. Whats driving that shift, he pointed out, is original equipment manufacturers technical demands, along with concerns about fuel economy and emissions regulations. And with a relatively small price difference between conventional and synthetic motor oils, its easier for vehicle owners to make the switch.
The U.S. continues to be a low viscosity grade market for PCMOs, and the report predicts this trend will increase. The market share of SAE 10W-XX engine oils is forecast to decrease by about 3.6 percent over the coming five years, squeezed by 5W and 0W grades.
While less of a change is expected in heavy duty motor oil demand, Morvey sees the same trend toward lighter products. Though the U.S. is still primarily a 15W-40 market, we are seeing some penetration and adoption of 10W-30, and we think that will continue, he reported.
By market segment, in 2014 installed consumer automotive lubricants kept the largest share of sales at 68 percent. This was divided roughly between quick lube centers (35 percent), new car dealers (27 percent), tire, brake and muffler shops (16 percent), and other installers. Retail sales were split almost evenly between auto part suppliers and mass merchants.
The commercial vehicle lubricants segment in the U.S. is divided evenly between on-highway and off-highway applications. On-highway uses included for-hire vehicles (46 percent), private fleets and lease-rental (each 18 percent), state and local government (11 percent), and transport (5 percent). Off-highway applications are mostly in agriculture (55 percent), followed by construction (26 percent), mining (18 percent), and the federal government (1 percent).
In the U.S. as well as the rest of the world, Shell and ExxonMobil are the top suppliers of all finished lubricants. In the U.S., they are followed by Chevron, Phillips 66 and BP. Shell maintains its lead over competitors in the passenger and commercial vehicle segments, but industrial is very fragmented, said Morvey. The majors are participants, but they are clearly not as strong in commanding the type of shares that they do in the automotive sector.
The report is titled, Global Lubricants: Market Analysis and Assessment.