Global finished lubricant demand reaches an estimated 40 million tonnes in 2017. PCMO/MCO continues to lead the finished lubricant demand after taking over the leading position in 2016. The demand is forecast for minimal volumetric growth; however, growing segments, including synthetics, low visgrades, and alternative fuel vehicles (AFV), among others, offer a myriad of opportunities for all suppliers.
Kline estimates that Shell is the number one global supplier of automotive and industrial lubricants for the 12th consecutive year, followed by ExxonMobil. The top five global lubricants suppliers — Shell, ExxonMobil, BP, Total, and Chevron — account for more than a combined one-third of global lubricants sales in 2017.
“Shell’s lubricants portfolio is evenly balanced between consumer automotive, commercial automotive and industrial, which should hedge the company well against any significant consumer lubricant sales decline as the global passenger vehicle parc migrates from internal combustion engines to AFVs such as battery electric,” comments George Morvey, Industry Manager at Kline. “The Asia-Pacific region is where Shell derives most of its finished lubricants sales volume, followed by North America. The passenger vehicle parc in this region is comprised of two-wheelers and passenger cars/SUVs/minivans, which Shell lubricates with its Advance and Helix branded product portfolios.”
Huibert Vigeveno, Shell Global Commercial, Executive Vice President (including Shell Lubricants), said: “This is a fantastic achievement for Shell Lubricants and testament to our focus on meeting our customers’ evolving needs with continuous product and service innovation, technical leadership and investment in our portfolio of brands. We operate in a rapidly changing environment, but our strong track record of developing lubricants for challenging applications, together with our digital and service offering, ensures that we are well-placed to lead through the changes and opportunities that the energy transition brings.”The “Top 20” country markets combined account for more than 80% of total global PCMO demand in 2017. The United States is the largest country market, accounting for 21% of global demand in 2017, followed by China. The two country markets are at the opposite spectrum of development and opportunities.
Favoring premium grades, the U.S. becomes a 5W and 0W market with large synthetics penetration and quick lube, franchised workshop, independent workshop, and fast fit — the “go-to” service providers. The volumetric PCMO demand declines, affected by slower vehicle sales, growth of HEV, PHEV, BEV parc and ride-sharing economy. However, this mature market offers opportunities in new sectors such as quick lubes and e-commerce, among others. On the contrary, in China, demand increases in 2017 and is forecast to grow at a CAGR of 1.4% by 2027. A continuing shift to synthetics coupled with an expanding AFV parc will suppress volumetric growth, in both developed and developing countries.
Growing at a CAGR of almost 9% since 2015, while overall lubricant demand grew by 0.7%, synthetics reach 21% of the total global finished lubricants market in 2017, finds the just-published Global Synthetic Lubricants report.
Synthetic PCMO penetration at the country level varies significantly. Mature country markets such as the U.K., France, and Germany have high-penetration levels and limited opportunities. In emerging markets, supplier/marketer efforts continue to increase consumer awareness. For instance, in Mexico, synthetics demand is primarily for factory fill/exported vehicles.
Witnessing participation from various sectors such as majors, OEMs, ILMAs, and private-label, the synthetic PCMO market is intensively competitive and will see more and more competitors entering this market.
“Synthetic private label lubricants are poised to gain market share over the next five years, fueled by the increasing supply of premium basestocks and private label brands such as AmazonBasics,” comments David Tsui, the report’s manager. “However, there is a risk of commoditizing the synthetic lubricant market as many consumers already see private label products (in other retail markets) as equivalent to or substitutable for multinational brands.”
Synthetics HDMO penetration is much lower compared to PCMO, with limited but developing OEM technical demand being the primary driver. SAE 15W-40 will continue as the preferred visgrade over the forecast period, suggesting minimal synthetics and Group II as the default basestock penetration potential. However, 10Ws demand grows as a result of API CK-4/FA-4 as OEMs and fleets transition and upgrade. The new API category is helping to bring synthetics mainstream in the commercial segment but face a tough road ahead.
In light of the changing face of the lubricants market and Kline’s recently published reports analyzing this evolving industry, Kline is holding two webinars:
Global Lubricant Basestocks & Synthetic Lubricant Basestocks Markets, which took place on October 17 – REQUEST RECORDING
Global Lubricants & Synthetic Lubricants Markets, taking place on October 24 – REGISTER
In continuous publication since 2003, Global Lubricants: Market Analysis and Assessment provides a comprehensive, in-depth analysis of automotive and industrial finished lubricant products, end-use industries, trade classes, major suppliers, and market trends covering more than 60 country markets.
The Global Synthetic Lubricants study provides a comprehensive global analysis of the synthetic lubricants business, focusing on key changes, challenges, and business opportunities.