With total 2012 global lubricant demand estimated at 38.7 million metric tons, the market is effectively flat over 2011; however, this belies many changes within. Both North America and Western Europe continue to stagnate below pre-recession levels; and despite Asia picking up in 2011, this market also waned in 2012, with the most significant change being a net decline in demand in China, according to recently published Global Lubricants: Market Analysis and Assessment by international consulting and research firm Kline & Company.
The United States remains the largest lubricant market, but its estimated 22% global share continues to decrease. The Asia-Pacific region is the leading region in terms of volume, but the high value markets remain predominantly Western Europe and the United States.
Globally, Shell remains the market leader claiming 12% total market share, down slightly from 13% in 2011. Kah Peng Aw, General Manager for Shell Global Commercial Strategy Development said, “Our brands are important to us and it is reassuring that our strategy to enhance value is seeing results. We continue to drive our business forward with a value-led approach, be it in our world-class global supply chain, investments in cutting-edge technical innovation or market-leading products.”
ExxonMobil and BP follow with 10% and 7%, respectively. While Shell is expected to remain among the market leaders in the immediate future, according to Kline, it is the middle pack—regional majors and NOCs—that are anticipated to see the most changes, with companies like Fuchs and Gazprom expected to claim some market share from the top five leaders. In 2012, for example, Fuchs finds itself within the global top ten for the first time.
With the lubricant demand being sluggish worldwide, Group I base oils have been mostly squeezed out of automotive lubricants, particularly in North America, by low-sulfur content mandated reformulation trends and increasingly cost-effective Group II alternatives. Consequently, Group I producers are being impelled to focus more on the industrial sector despite the competition from low-cost naphthenics and Group II oils in some applications. As a result, the proportion of Group I stocks in global base oil consumption has been falling steadily from around 70% in 2000 to 54% in 2012, and it is expected to continue declining to approximately 30% by 2030.
A combination of increasingly stringent emission and fuel-consumption norms, more exacting OEM specifications, and volume allowing a more attractive cost-proposition, are among the leading factors promoting an increased market share of synthetic and semi-synthetic alternatives.
Although presently satisfying a modest demand, regulations in Europe—and increasingly in North America—are supporting growth in the re-refining sector. Already strong basestock prices prior to the recession caused a significant interest in re-refined basestocks. With OEMs generally not objecting to the use of re-refined basestocks, as long as the quality and performance of the final product meets its specifications, astute marketing and consumer education are key to realising this stream's significant potential, according to Kline.
