Lubricating oils have long been one of the most appealing sections of the oil and gas value chain, but with the advent of electrification in the transportation industry, disruption is on the horizon. Let’s deep dive and take a look at some of the most interesting statistics that we can see from the global lubricant industry. It will help you to have a clear idea about the future of lubricant industry as well.
How does the global lubricant industry behave?
Lubricating oils have long been one of the most appealing segments in the oil and gas value chain due to their continuously strong margins. However, if electrification takes root in the transportation industry, we may see some disruption. We did an in-depth market assessment and created detailed estimates out to 2035 to analyze what may be on the horizon. While volume growth may be slowing, there is still space for value-pool increase, according to the study. This, however, will vary greatly by area, market category, and product kind, so knowing where to play is crucial. This expansion is also fraught with dangers, so investors should keep a careful watch on changes in areas like technology and legislation.
The analysis verified our predictions that lubes volume growth would decelerate significantly in the future years, with road-transport demand (now 40% of total) anticipated to peak within the next five years. From then on, transportation demand will gradually fall as the percentage of electric cars (EVs), car sharing, and hailing grows, and as residual internal-combustion-engine (ICE) vehicles have longer replacement intervals.
The increasing demand for lubricants
The rise of lubricants will moderate significantly, and demand for road transportation might peak in the next five years.
Other modes of transportation, such as maritime, aircraft, and rail, have less major demand but will continue to develop. Non-transport and industrial consumption, which account for the bulk of lubes demand, should continue to rise at a steady pace, mirroring global GDP per capita growth and more than compensating for the drop in transportation demand.
When it comes to margins, the road-transport industry will benefit as higher-margin synthetic lubes develop rapidly, capturing 70% of the market by 2035. Premiums will be greatest for top-branded items, albeit whether this can be maintained remains to be seen.
During the projection period, the worldwide lubricants market is estimated to reach $115,350.6 million, up from $95,403.9 million, with a 2.3 percent CAGR (2020-2030). Increased sales of new automobiles in developing markets and greater consumer knowledge of lubricants are two significant reasons driving market expansion. Process oil, grease, gear oil, engine oil, metalworking oil, general industrial oil, and transmission and hydraulic oil are the product types that make up the market.
The demand for engine oil is increasing
In the past, the engine oil division dominated the market, and it is expected to continue to do so throughout the projection period as well. Sinopeconline says the growing demand for automobiles, as well as the global expansion of the transportation sector, is driving up the need for engine oil. Furthermore, individuals are becoming more aware of the advantages of using lubricants in their automobiles. These items help to improve the vehicle’s mileage and extend its lifespan.
Chemical, food & drinks, automotive and other transportation, metallurgy and metalworking, and heavy equipment make up the lubricants market, with automotive and other transportation accounting for the largest part of the market in 2019. Vehicle sales are expanding in tandem with people’s increasing disposable income. This, in turn, is causing the transportation business to expand. Furthermore, the booming mobility services industry throughout the world is driving up demand for lubricants.
Regions where there is a high demand for lubricants
In terms of geography, the Asia-Pacific region led the worldwide lubricants market in 2019 and is expected to continue to do so throughout the forecast period. The regional domain is being driven by the relocation of manufacturing plants from around the world to Asian countries such as India and China, which have less stringent environmental regulations and lower labor costs. During the projected period, the Middle East and Africa are predicted to increase at the quickest rate.
The rising sales of cars in emerging nations such as Brazil, China, India, and Mexico are a major element driving the lubricants industry forward. The per capita income in these nations has grown tremendously, due to which, the demand for automobiles has also risen. Lubricants are used in the crankcase of the vehicle’s engine to keep it running smoothly. These compounds also minimize friction, which helps to extend the life of cars by reducing wear and tear.
Because customers are becoming more aware of the benefits of these goods, the lubricants business has been expanding as well. Previously, lubricant knowledge was restricted to Western nations; today, people are becoming more aware of these items all over the world. Companies in the industry are also experimenting with innovative ways to raise public awareness of their brands. For example, businesses are providing free samples and gifts to users in order to raise lubricant knowledge and interest.
Challenges faced by the lubricant industry
The most difficult task is adjusting to a constantly changing environment. Because we supply lubricants and petroleum products, we are a vital company. Unfortunately, the automobile sector has seen a substantial slump or possibly a closure across a big chunk of our area. Simply stated, people aren’t driving and aren’t utilizing our goods as a result. Commercial vehicles and most building industries are still operational, and demand in that area is luckily still there. It’s hit-or-miss in the industrial/manufacturing industries. Some factories have been shut down or reduced to a skeleton workforce, while others have totally ceased producing. Certain areas of the market are still doing normally, but not above average, which isn’t enough to compensate for the losses.