South American Lube Demand Expands


China is drawing a lot of attention these days as a growth opportunity for lubricant marketers. But a new study says prospects are also good on the opposite side of the world, in South America.

Lube demand in South and Central America is projected to grow 2.4 percent annually for the next decade, according to Kline and Co.s Competitive Intelligence for the Global Lubricants Industry, 2003-2013. As the Little Falls, N.J., firm noted, that is significantly greater than the projected global rate of 1.4 percent.

When examining prospects for growth through the next decade, suppliers of finished lubricants must recognize South America as one of the most attractive candidates, Kline said, in announcing the study Oct. 27.

South and Central America may draw less attention than other regions because its lubricant market is relatively small. Demand was 2.7 million metric tons of finished lubes in 2003, Kline said, just 7 percent of global total. In contrast, China has moved behind the United States as the worlds second-largest country market – accounting by itself for 12 percent of global demand – and is projected to grow approximately 3 percent annually.

Brazil, the worlds sixth-largest nation by population, is the dominant player in South and Central America, being responsible for 52 percent of the regions lubricant demand. It is followed by Argentina, Columbia, Guatemala, Venezuela and Peru.

Klines study noted that the quality of lubricants consumed in South and Central America is generally low compared to more developed regions. Seventy percent of crankcase oils correspond to no better than API-SF or API-CC.

The standard lubricant grades most used in Bogota are not the same as in Boston, said Geeta Agashe, director of the firms Petroleum and Energy Practice. While we are seeing the emergence of change in the grades of lubricants used, marketers need to understand that the developing markets in South America do not yet consume large quantities of more modern lubes.

Still, the firm sees prospects for improvement. As in China, economies in South and Central America are projected to grow, stimulating increases in the size of vehicle fleets. Kline said the region will also follow trends already established in more developed regions, including fleet modernization that spurs use of more modern and lower-viscosity motor oils; increased use of multigrade motor oils; increased use of synthetic and synthetic blend lubricants; increased penetration of quick lubes; and stricter governmental regulation on environmental issues.

Automotive lubes currently make up 66 percent of the regional market, with heavy-duty and passenger car engine oils constituting 29 percent and 21 percent, respectively. (The rest is mostly gear oils and transmission fluids.) Industrial oils account for 34 percent of the total market, with metalworking fluids making up the biggest part of the category, Agashe said, followed by hydraulic fluids, process oils and industrial engine oils.

The study said the regions lubricant market provides an interesting stage for competition among global majors, large nationalized oil companies such as Petrobras and Petroleos de Venezuela (PDVSA), smaller local blenders such as Ipiranga, and medium-sized foreign players such as Repsol YPF and Agip.

ChevronTexaco, focusing on the automotive segment, increased its market share in 2003 and now holds the biggest share among majors, Kline said.

Competitive Intelligence for the Global Lubricants Industry, 2003-2013 is an ongoing study updated annually. Subscriptions and portions of the study are now on sale. Further information is available at

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