Klines study, Global Lubricants 2011: Market Analysis and Assessment, estimated 2011 total global finished lube demand at 38.6 million metric tons.

Europe had a 17.2 percent share in 2011, which is projected to decrease to 14.9 percent by 2021. Africa and Middle East accounted for a combined 8 percent of global finished lube demand in 2011. Their portion is projected to decrease to 7.4 percent by 2021.

Kline forecasts that lubricant demand in Europe will grow at a compound annual rate of 0.8 percent over the next five years, with demand flat or declining in countries such as Germany, Italy, France and Spain. The firm expects demand to grow annually by 1.1 percent in Africa and the Middle East, 3.8 percent in the Asia-Pacific region, 2.8 percent in South America and 0.6 percent in North America.

The real bright spots are in countries such as Russia, Poland, Turkey and smaller Eastern Europe country markets like Belarus and Ukraine, as well as Kazakhstan, said George Morvey, project manager with Kline and Co.s Energy Practice. He said its important to note, though, that while positive lube demand growth is expected in a country like Kazakhstan, its total market demand is low at only 160,000 metric tons in 2011, compared to France and Italy at 633,000 and 498,000 tons respectively, or Germany at nearly 1.1 million tons.

In the Middle East, the Saudi Arabian consumer automotive market segment is nearly all installed or do-it-for-me. Kline found that independent workshops, more commonly known as puncture shops, account for about 60 percent of consumer lubricant sales. The growth in new car sales has increased the number of franchised car dealers and authorized workshops, which account for about 20 percent of sales, according to the study.

However, as Saudi Arabia is such a large country, it is not possible for vehicle OEMs to have franchised or authorized workshops everywhere, Morvey said. Quick lube centers are filling the void as an accepted installed service provider and alternative to puncture shops for owners of new vehicles. Klines research found that Fuchs along with local supplier Petromin (through its Petromin Express chain) and Gulf Oil (through its Gulf Express) are the leaders in terms of quick lube operators in Saudi Arabia.

A modern and well run quick lube outlet offers finished lubricant suppliers the opportunity to sell engine oils that meet the latest [American Petroleum Institute] service categories, promote higher margin products like synthetics to owners of new vehicles, and build consumer brand awareness and loyalty, he noted.

In the Africa and Middle East region, Kline estimates that South Africa accounts for about 12 percent of total regional demand, making it one of the leading country markets. South Africas economic growth is expected to slow down during 2012, Kline projects, as a result of lower demand from European countries, likely to affect exports and production in the agriculture, mining and manufacturing sectors.

In South Africa, investments in energy sector infrastructure could result in greater demand for lubricants. The limited supply of electricity poses a challenge, particularly to the manufacturing and mining industries in the country, since these industries are large electricity consumers, Morvey said. Major investments are expected in the energy sector, where the government is trying to solve its shortage in capacity.

In 2010, the South African government launched the Integrated Resource Plan, which set action plans in the energy sector, with goals up to 2030. Through a variety of projects, the plan emphasizes broadening energy carriers to include gas, imports, nuclear, biomass, renewable, as well as the efficient use of existing resources, such as coal, while ensuring continued investment in clean coal technology.

The impact resulting from these projects on the demand for lubricants will go far beyond the needs of the construction industry, and also lead to stronger demand from the manufacturing and mining industries, Morvey said. As electricity capacity increases significantly, both sectors would experience fewer blackouts, thus potentially increasing general output.

Kline expects the vehicle parc in South Africa to continue to grow over the following five to 10 years. The number of vehicles will increase significantly in the future, particularly cars, as a result of the growing middle class, Morvey said. This will result in growth in demand for lubricants. However, as the vehicle parc gets younger, fewer oil changes will be needed, Kline forecasts.

Extended drain intervals are likely to accelerate in the future as old vehicles are renewed, Morvey pointed out. This will particularly be the case with taxis, boosted by new subvention programs.