Synthetics Gaining Ground in S.E. Asia

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Synthetic lubricant demand in Southeast Asia will increase by 3.5 percent annually through 2008, a new study projects. It adds, however, that major oil companies are best-positioned to take advantage of the growth.

The Southeast Asian Synthetic Lubricants Market Report, by the Chemicals Group of Frost & Sullivan, estimates that the five-nation region consumed $819 million of synthetic lubes last year and that the level will rise to $1.04 billion by 2008.

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According to the London-based firm, the regions demand for synthetic lubes is primarily for automobiles. Demand suffered last year as an economic downturn made consumers extremely price conscious and led to a drop in car sales. But the number of upscale car purchasers is rising again, the firm says, and premium motor oil consumption should follow.

Although margins on synthetic lubes are high, sales require aggressive promotion because products cost four to five times as much as mineral-oil based lubricants. Major oil companies claim most of the market because they have financial resources to support such campaigns, as well as the global reach to align with original equipment manufacturers.

The major oil companies dominate the synthetic lubricants market in Southeast Asia, barring Indonesia, the report states. It is a challenge for smaller companies to compete with [them]. The impact of this challenge is expected to be high throughout the forecast period.

The report includes chapters on each of the regions nations – Thailand, Malaysia, Singapore, Indonesia and the Philippines. It singles out Malaysia as having the highest growth potential, with demand projected to reach $249 million by 2008. Aggressive marketing has made Malaysians generally more aware of synthetic lubricants. State-owned oil company Petronas has maintained a high profile at racing events and owns a stake in Proton, the car model owned by most Malaysians.