Far East to Continue Leading Demand

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VIENNA – China is expected to hold its position as the worlds largest lubricant market in the decade to come as the United States market stagnates and Europes shrinks, said an industry insider.

In 2012, the worlds lubricant market was projected to expand at a 2.7 percent compound annual growth rate in the years to come. Last year, the growth rate dropped to 1.6 percent, and so far it is on pace for 0.7 percent in 2015, said Alain Mathivaud, a business analyst for French energy giant Total, citing data from London-based consultancy IHS.

This negative trend is driven by a steady decrease of lubricant demand in Europe and stagnation in both Americas, he told ACIs European Base Oils and Lubricants conference held here Sept. 16-17.

For example, the European lubricant market is expected to shrink from 6.7 million tons per year in 2015 to around 6 million tons in 2025. IHS data lists Russia as part of the European market. Volumes in Europe are going down in both industrial and automotive segments, Mathivaud said.

In the following years, [North and South] American lubricant demand is expected to stagnate at around 11.3 million t/y, he continued. In contrast, the regions of Africa, the Middle East and Asia-Pacific will be the main drivers of growth. Africa and the Middle East lube markets could grow from 4.5 million t/y in 2015 to 5.2 million t/y by 2025, while the Asia-Pacific region is expected to show the best result, with demand growth from 15.7 million t/y to almost 19 million t/y in 2025, Mathivaud said.

Growth of the global market is driven by the automotive segment, while the global industrial lubricants market will stay between 14 and 15 million tons.

Globally, the [compound average annual] growth rate of the automotive lubricant market is expected to stay at a little less than 1 percent through 2025, with decline in Europe and both Americas of 1 and 0.2 percent [per year], respectively, he added. Africa, the Middle East and Asia-Pacific regions are expected to grow at 1.5 percent and 2 percent [per year], respectively.

He said that during the next 10 years, Europe is slated to be the only region in which industrial lubricants demand will decline, and it will do so at rate of 1 percent per year by 2025. The segment will grow by 0.3 percent per year in the Americas, 1.4 percent per year in Asia-Pacific, and 1 percent per year in both Africa and the Middle East.

The United States, China, Japan, Russia and India were the worlds largest lubricants markets 20 years ago. At that time global lube demand stood at 37.3 million t/y. The U.S. lubricant market was number one in 1995, with demand that reached almost 9 million t/y. China was way behind with demand at 5 million t/y, while Japans, Russias and Indias lube demand stood below 2 million t/y, Mathivaud said, adding that they were followed by Brazil, Germany, the United Kingdom, South Korea and France, which all had demand of less than 1 million t/y.

Total global demand hasnt changed much since then – IHS projects it will be 38.3 million tons in 2015. But geographical distribution is totally different. China is the top lubricant market, while the U.K., France, Italy and Spain are losing their positions. In all, only six European countries – Russia, Germany, the U.K., France, Italy and Spain -are listed in the top-20 list of the worlds largest lube markets, according to IHS.

Oddly, 30 years ago the global market was the same size it is today – around 39 million t/y, including marine lubes and despite there being fewer cars on the roads, Mathivaud concluded. France was the sixth-biggest lube market in the world, whereas now it has dropped out of the top 20.

In 2015, Chinas lube demand is projected to reach 7.4 million tons, making it the largest market in the world. It is followed by the U.S., with lube demand there expected to reach 7.2 million tons, and India, which has demand of around 2 million tons, Mathivaud said. These markets are followed by Russia, Japan and Brazil, which are slated to consume around 1.5 million t/y of lubes each in 2015.

In 10 years, the top-20 global lubricant market list will consist of four rather than six European markets, and all of them will be losing their positions, Mathivaud observed. The worlds total lube demand is projected to reach 41 million t/y by 2025.

China will dominate the global lubricant market that year with lube demand of almost 9.5 million t/y, followed by the U.S., which is expected to consume a little less than 7 million tons annually. By 2025, Indias demand could reach up to 3 million tons, followed by Brazil (1.5 million t/y) and Russia (1.3 million t/y).

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