Lubricants market continues to be driven by industry fundamentals despite pandemic
Kline's just published Global Lubricants Market Analysis and Assessment syndicated study finds overall global automotive and industrial lubricants demand reached 40.7 million tonnes in 2019.
In early Q2 of 2020, as the COVID-19 (CV-19) pandemic impacted the global economy and country level lockdowns were announced and implemented, we re-aligned our research efforts to assesscovered in this edition of the Global Lubricants study.
Kline developed a proprietary demand model that divided 2020 into four stages: (1) Pre-crisis, (2) Lockdown, (3) Recovery, (4) Post-crisis. Based on information publicly available at the time, real-time insights from industry experts, and Kline's analysis, we assessed the impact and duration of the Stage 2 lockdown on all automotive and industrial sectors at the country level, and the pace of recovery/post- crisis to estimate the demand contraction in 2020 against our 2019 market estimates. More importantly, we estimated future growth prospects and opportunities over the study's two 5-year forecast periods, 2020-2025 and 2026-2030. To get more information about our findings, request access to Kline's on-demand webinar.
The top five country markets, the United States, China, India, Russia, and Japan, account for 53% of total global lubricant demand in 2019, with the United States and China together accounting for just under 40% of total global demand. These countries are reliable indicators of automotive engine oil viscosity grade evolution, synthetics penetration, and opportunities for all lubricants industry participants. In terms of product supply, Kline's study finds that the top five lubricants suppliers, Shell, ExxonMobil, BP, Total, and Sinopec, supply 35% of total global lubricants in 2019.
"Our study finds that Shell continues to be the No. 1 overall global supplier of automotive and industrial lubricants for the 14th consecutive year," notes George Morvey, Industry Manager at Kline.
"Contributing to this significant achievement is Shell's leadership position in the United States, with a 13% overall market share, due to its strength in the fast lube and other installed service channels in the consumer automotive market segment with its Pennzoil, and its leading position in the commercial segment with its Rotella branded product lines. Moreover, Shell claims the No. 3 position overall in China, following the two domestic suppliers, PetroChina and Sinopec."
"Fourteen consecutive years as the world's leading lubricants supplier demonstrates Shell's unwavering commitment to our customers and the strength of our superior product portfolio," said Carlos Maurer, Executive Vice President, Global Commercial, Shell. "And we're not just leading in one sector. We're leading globally in the three categories tracked by Kline - cars, trucks and industrial equipment. Lubricants are a growth priority for Shell, which is why as our customers' needs change, so do we. In response to the challenges of Covid-19, our lubricants business supplied even more premium products to the market, playing a vital role in keeping the world moving and machinery operating efficiently. Looking ahead, our customers want more products that deliver improved performance with lower emissions, using fewer natural resources and less waste, and you'll see Shell Lubricants expanding our product portfolio to meet that demand."
While the United States and China both forecast for no volumetric growth over the forecast period, especially when factoring in the impact of CV-19, there are lesser volume/developing country markets that are expected to quickly emerge from CV-19 and return to near-normal levels of lubricants demand in 2021 and beyond. One such example is the seventh-largest lubricant consuming country market, Indonesia, which accounted for 2% of global demand and 6% of Asia-Pacific demand in 2019.
Indonesia is forecast to enjoy positive lubricant demand growth in both the automotive and industrial segments with a combined CAGR of 1.8%, 2019-2024, including Kline's assessment of CV-19 in 2020. In the consumer lubricants segment in the country, fuel stations are an important channel for the sale and installation of engine oil for passenger vehicles and two-wheelers, with all the leading suppliers having a presence in the space. Fuel stations afford suppliers the opportunity to engage with existing and potential customers, expand consumer awareness and loyalty, and test marketing and promotional programs and campaigns. While emerging pre-CV-19, mobile oil change service providers have expanded in Indonesia and are quite common and an acceptable option for routine oil and filter changes for passenger vehicle owners. Opportunities exist for lubricants suppliers to partner with mobile oil change operators seeking alternative venues to communicate their product and brand message and engage with vehicle owners.
Despite the demand disruption and upheaval to traditional and established market conditions and demand trends for finished lubricants post CV-19, Kline's study finds that industry fundamentals will continue to drive the global market and remain viable, including synthetics penetration, growth in OEM genuine/co-branded products, demand for longer oil drain intervals, penetration of electric vehicles, demand for efficiency and sustainability, evolving manufacturing processes, reduced maintenance and downtime, and rapid acceleration of competitive pressure from all players, especially private-label and distributor house brands, in the global finished lubricants industry.