Global Industry Analysis (2017 – 2020) – Growth Trends and Market Forecast (2021 – 2025)
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Lubricants Remains at Core of Industrialization and Economic Progress
Lubricants are vital elements in industrial operations. They are used to lessen friction and abrasion and to eliminate residual deposits in the mechanical components, thereby extending machine runtimes. In an era of sustainability, energy savings and emission control, lubricants play an important role in resource management and environmental sustainability. Lesser mechanical friction means reduced power consumption and fewer emissions. Consequently, lubricants support sustainability targets in production and manufacturing spaces.
Every year, more than 35 million tons of lubricants are consumed across various industries. Base oils and chemical additives are the key components of lubricants. Mineral lubricants have long been the first choice in the market owing to their cost-competitiveness and availability as compared to their synthetic counterparts. However, the demand trends have gradually started shifting towards more performance and sustainable synthetic or semi-synthetic lubricants.
Furthermore, synthetic lubricants have the advantage of longevity due to their low volatility and improved thermal stability as compared to mineral lubricants. Growing emphasis on utilizing environmentally sustainable solutions in the transportation sector to improve fuel economy and reduce CO2 emissions are expected to boost the demand for synthetic lubricants over the coming years.
Motorization and Industrialization in Asia Pacific Drives Regional Lubricants Market
In 2018, Asia Pacific accounted for more than 45% of the total lubricants market. The global lubricants market has seen a dramatic rebound post-2008-2009 economic recession. Asia Pacific is a driving region, aiding this recovery industrialization and motorization undergoes massive evolution. However, this region still holds less per capita lubricants consumption as compared to developed regions of North America and Europe.
Post-2008, North America and Europe have shifted to the usage of high-quality lubricants with improved efficiencies and long-drain intervals. Furthermore, environmental regulations in Europe and North America regarding disposal and usage of lubricants are expected to drive the growth for lubricants derived from eco-friendly, bio-based materials or re-refined base oils. The Middle East & Africa is also expected to exhibit the fastest growth owing to changing landscape in infrastructure investment and the automotive industry. Strong investment in mining and energy and transportation sector has been a boon to the rise in demand for lubricants in the region.
Market to Thrive Due to Encouraging Manufacturing Sector in Emerging Economies
New government policies and initiatives are likely to encourage the manufacturing sector, especially in the Indian Subcontinent and Southeast Asia. As newer production technologies and infrastructure develops in the region, the lubricants market will gear up to meet the customized needs. Per capita consumption of lubricants is around 3.7 Kgs as compared to the world average of 5 Kgs, creating an immense market potential for years to come. There is substantial growth in demand for metalworking fluids, hydraulic fluids, industrial grease, and marine oils due to advancement in the industrial sector.
As the world moves towards the electrification of roads, hybrid cars, and electric vehicles will keep on redefining the automotive industry. Demands for lubricants will also shape up with the ad cements in the automotive industry. Currently, engine oil comprises the largest share in the segment. The automotive industry commands more than half of the consumption of lubricants across the globe. A new set of lubricants needs to be developed to meet the performance of electrical and gear components in next-generation cars. A lot of research and development is being carried out in the field of biolubricants, which can be integrated with EV and HEV fluids for a more eco-friendly and suitable solution.
Electric Vehicles Batteries and Environmental Regulations to Pose Serious Threat
Evolution of battery technology, environmental regulations, and industry consolidation are considered among the major disruptive factors affecting the growth of lubricants. Demand for lubricants will undergo a drastic change in consumption trends, especially with the introduction of battery-operated electric vehicles. BEVs are expected to capture 5%-10% of the total vehicle fleet by 2030 and expected to pose a larger challenge to the lubricants market as they do not use engine oils and consumes a minimal amount of grease. Tougher environmental policies will also give rise to the industrial revolution focusing on improved recycling technologies and circular economies, thus affecting the overall lubricants demand in industrial sectors.
Companies Focus on 3P’s of Sustainability: Profit, Planet, and People
The global lubricants market is highly vibrant and intense, with plenty of global, regional, and independent lubricant manufacturers. Companies such as Shell, ExxonMobil, Total, BP, Chevron, and Sinopec have integrated business operations. Companies are focusing on strategies such as mergers, diversification, and business restructuring to gain sustainability and resilience in the market.
In 2019, Shell announced carbon-neutral wind turbine oil, Shell Omala S5 Wind 320. Shell has upped its efforts to create an environmentally sustainable portfolio. This new oil comes with a 10-year warranty aiding in reducing costly breakdowns and wear protection. Similarly, In 2019, Total launched a range of recycled hydraulic fluids for industrial applications. These new ranges of lubricants are made from regenerating oil reducing the environmental footprint of production thus contributing to the goals of a circular economy.