Lubricants Market Overview
The global lubricants market is expected to grow at a CAGR of 3.0% during the forecast period, to reach $102,501.3 million by 2022. The increase in demand for lubricant is anticipated due to growing automotive industry, increased consumer awareness about lubricants and government regulations.
Lubricants is a viscous fluid (finished product) used in various industrial applications for proper functioning of machineries and its parts. The global lubricant market has been categorized on the basis of product and by application. Based on type of product, the market has been generating highest revenue from mineral lubricant, while synthetic and bio-based are the other major lubricants.
GLOBAL LUBRICANTS MARKET SHARE BY PRODUCT, BASES ON VALUE (2014 AND 2020)
In 2014, the mineral lubricants accounted for the largest share among all the products of the lubricants market, and it is expected to grow with a CAGR of 2.7% during the forecast period. Based on application, the automotive segment held the largest market, (22,740.62 Kilo Tons) in 2014, and it is expected to reach 25,347.84 Kilo Tons by 2020, growing with a CAGR of 1.81% during the period 2015-2020.
Geographically, the Asia-Pacific market accounted for the largest share in the lubricants market in 2014. The greatest future opportunities for lubricants market players are Brazil, China and India. Players in every industry, including energy industry, believe that BRIC (Brazil, Russia, India and China) markets are profitable market to invest, because of rapidly growing economies and increase in direct foreign investment in the countries. The increased car ownerships and rapid development of industrialization in BRIC countries are the major factors driving the growth of the market in these countries.
Lubricants Market Dynamics
Adoption of lubricants by the consumers is a major trend seen in the lubricants market. Harmful environmental effects are being reduced because the consumers have started adopting bio-lubricants, resulting in the growth of the market. In BRIC countries, rapid growth in energy demand is expected to continue in the forecasted period, resulting in high growth of the market in the countries. However, with the arrival of hybrid-electric vehicle, the lubricants market is affected to some extent. The life cycle cost of hybrid-electric vehicles, including maintenance and fuel cost, and cost of purchase, is much less than that of conventional vehicles.
The demand of lubricants is driven by factors such as growing automotive industry, increasing consumer awareness about lubricants and government regulations. Consumers have become more aware about the advantages of using lubricants in the machineries and other products. As saving resources cutting emission and energy became central environmental matters, the lubricants are progressively attracting more consumer awareness. Companies are also adopting a customer oriented method so as to focus on creating brand awareness among the consumers through visual and print media. Some of the examples for the method are trade shows and promotional campaigns, where the company offers free samples or gifts to consumers, leading to increase in interest and awareness among the consumers for lubricants.
Under the brake oil category of lubricants, usage of lubes by commercial passenger vehicles and launch of new brake systems are changing customer attitude towards specialty lubricants, resulting in high demand for lubricants in the forecasted period. Most of the customers have understood the importance of using special lubricants and they are also ready to pay a premium for extra benefits they receive by using it.
One of the major trends in global market include adoption of bio lubricants by consumers. As the need of enhancing fuel efficiency in vehicles is increasing, the traditional materials are being replaced by synthetic lubricants. Harmful environmental effects are being reduced because the consumers have started adopting bio-lubricants, resulting in the growth of the lubricants market. Bio lubricants are materials that are based on renewable and biodegradable base reserves such as fatty acids reacted with synthetic alcohols for producing esters. Bio preferred program, created by Farm Security and Rural Investment Act (FSRIA), increased the use and procurement of bio based products by creating labeling program to enable the marketing of bio based products and procurement preference program for federal agencies and their contractors.
North America has been the largest market of bio lubricants during 2011-2014, followed by Europe, and is expected to lead the market in the forecasted period 2015-2020.
The future opportunities for lubricants market players lie more in developing economies, such as Brazil, India, India and China (BRIC). Players in every industry, including energy industry, believe that BRIC markets are profitable market to invest because of rapidly growing economies and increase in direct foreign investment in these countries. Increased car ownerships and rapid development of industrialization in BRIC countries are the major factors driving the demand of lubricants in these countries.
Insistent emission control upgrades and increased vehicle sales are supporting China automotive lubricants market to have the highest growth throughout the world. Volkswagen and General Motors, accounting for more than 32% of new vehicle sales, are the leading foreign brands operating in China. In BRIC countries, rapid growth in energy demand is expected to continue in the forecasted period, resulting in high growth of the market in these countries.
Further, the standards and regulations for automobile exhaust and industrial waste gas emissions are providing ample opportunity for the growth of lubricants market. In Western Europe and North America, before granting movement permit, all the vehicles have to pass emission test, which promotes the use of higher tier lubricant additives and oil changes. European Union (EU) issued a regulation for reducing carbon dioxide emissions in light vehicles, which requires Original Equipment Manufacturers (OEMs) to reduce carbon dioxide emissions from 130 gram per kilometer (g/Km) to 95 g/Km. Passenger car exhausts in China also have some mandatory requirements, which is to reduce carbon dioxide emissions from 6.9 liter per hundred kilometer in 2015 to 5 liter per hundred kilometer by 2020. The increase in improvement of environment requirements implies an increase in demand of lubricant additives in the forecasted period.
Lubricants Market Competitive Landscape
The global lubricant market is highly fragmented, where top three players accounted for less than 35% revenue. Some of the key companies operating in the lubricants market include BP plc, Chevron Corporation, China Petroleum & Chemical Corporation, Exxon Mobil Corporation, Fuchs Petrolub SE, Idemitsu Kosan Co. Ltd., LUKOIL Oil Company, PetroChina Co. Ltd., Royal Dutch Shell plc and TOTAL S.A.