Lubricants Industry to 2015 - Surge in Automotive Market in Emerging Economies Driving Demand

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					   Lubricants Industry to 2015 - Surge in Automotive Market in
             Emerging Economies Driving Demand
 Reference Code: GBIGE00043MR                                                                                                  Publication Date: April 2011


                                       Lubricant Demand is Boosted by the Growing Asia-Pacific Automobile Market

   China is now the world’s            The global automotive industry is back on the growth path after the setback caused by the financial
   largest automotive market,          crisis of 2009. The industry is now actively pursuing innovative new technologies, production and
   showing 20% growth in               business techniques. Although it is on a growth path, the fact remains that it will take a long time for
   December 2010                       it to recover.
   compared with the same              Asia has recovered well as compared to the West, and this is reflected in the growing automobile
   period for the previous             numbers. China, the world’s largest automotive market, showed a more than 20% growth in
   year                                December 2010 compared with the same period for the previous year, and this trend is expected to
                                       continue. According to the China Association of Automobile Manufacturers, China’s automobile
                                       production was 1,864,800 units in December 2010, an increase of 6.27% as compared to
                                       November 2010. Passenger car and commercial vehicle production were 1,445,300 units and
                                       419,500 units respectively, an increase of 22.51% and 21.60% over the last year. From January to
                                       December 2010, China’s automobile production was 18,264,700 units, an increase of 32.44%;
                                       passenger car and commercial vehicle production were 13,897,100 units and 4,367,600 units
                                       respectively, an increase of 33.83% and 28.19% compared with the same period last year.
                                       China and India seem to have weathered the financial crisis storm, compensating for the decline in
                                       lubricant demand in the rest of the world. In 2009, these countries took over the automotive
                                       production leadership position, with over 14 million units – a surge of more than 48% over 2008 –
                                       and well over 10 million more than the total production of the US, Canada, and Mexico combined.
                                       In India, the production growth was less dramatic.
                                       As auto manufacturing shifts from North America to the Asia-Pacific region such as China and
                                       India, so too does the demand for automotive lubricants. For suppliers, to take advantage of the
                                       opportunity, these growing markets have become an important target to expand their production
                                       and distribution. Given its close proximity to China, for example, South Korea has become a major
                                       supplier of Group III base stocks, importing 70 to 80% of Group III consumption into the Chinese
                                       market.


                                        Automobile Market Statistics, India, 2008-2010

                                                  12,000,000



                                                  10,000,000



                                                   8,000,000



                                                   6,000,000



                                                   4,000,000



                                                   2,000,000



                                                              0
                                                                  Passenger Vehicles   Commercial Vehicles    Three Wheelers        Two Wheelers

                                                                                       2008-2009             2009-2010

                                        Source: GBI Research/SIAM



Lubricants Industry to 2015 - Surge in Automotive Market in                                                          GBIGE00043MR / Published APR 2011
Emerging Economies Driving Demand
                                                                                                                                                     Page 1
                                                                                  © GBI Research. This is a licensed product and is not to be photocopied
                                       Premium Lubricant Products Showing Promise of Increasing Demand
                                       Demand for premium lubricant products is growing, with increasing environmental concerns and
                                       the need for high quality lubricants to improve fuel economy. As the number of vehicles is going to
                                       increase in India and China, manufacturers need to adopt better design and performance criteria.
                                       With rapid economic development in both India and China, and migration towards higher quality
                                       lubricants, premium lubricants of higher grades are gaining market share.
                                       Most vehicles are sold to first time buyers with very little knowledge of differences between lower
                                       grade and higher grade oils. This can be exploited by lubricant blenders through better branding,
                                       and giving good price/performance differentials between lower grade lubricant and higher grade
                                       lubricant. The consumer approach for vehicle maintenance is moving towards a preference for
                                       higher quality products, thereby increasing the demand for premium lubricants. Such consumers
                                       will be the target market for higher grade lubricants and performance of premium brands.
                                       Shell Remains the Lubricant Market Leader for the Year 2009
                                       Shell has retained its market leader position despite recession having a deep impact in the
                                       lubricant industry in 2008-2009. Shell holds around 13% of global market share for finished
                                       lubricant sales. Shell is followed by Exxon Mobil and BP, having second and third rank with 11%
                                       and 7% of the global market share, respectively. They were followed by Chevron, Total, and
                                       PetroChina. GBI Research estimated the global lubricant demand in 2010 at 34.3 million tons. This
                                       significant increase of 4.5% over the previous year follows the 9% decline the industry experienced
                                       between 2008 and 2009.
                                       The Asia-Pacific region has shown a robust growth and the impact of recession has been less
                                       severe than in other regions. Asia-Pacific is showing promise of continuous growth and prosperity,
                                       and accounts for 36% of the total lubricant market share, which is expected to increase to more
                                       than 40% by 2015. On the other hand, the US, which was severely affected by the economic
                                       downturn, is still a major lubricant consumer. However, its position will depend on how the region
                                       will deal with the aftermath of the downturn and adapt to market conditions in coming years.
                                       Big Oil Majors Facing Competition from National Oil Companies
                                       National oil companies (NOCs) have been a competitive threat to international oil companies
                                       (IOCs) in their respective countries. However, a number of aspects have now surfaced to prompt
                                       once-isolated NOCs to expand their operations on a global scale. This emerging threat will force
                                       IOCs to work out new tactics to compete in the global marketplace against nationalized companies,
                                       for which earnings and investor satisfaction are not the only inspiring factors.
                                       Most NOCs have been satisfied to trade only within their own country markets and mostly dealt in
                                       low-grade, low-priced lubricant products. But, as oil prices surged and emerging economies gained
                                       prosperity, increased oil and gas consumption has led to a significant rise in financial earnings for
                                       some NOCs. They have become more monetarily stable than ever – predominantly in developing
                                       nations, where assets are plentiful and labor costs are relatively cheap. This financial security and
                                       stability has allowed the growth of in-house R&D and the procurement of advanced and better
                                       technologies to develop more sophisticated production operation, processes and products. Many
                                       NOCs are now looking to global markets. With global lubricant demand at around 34 million tons in
                                       2010, the global market is appealing, particularly in the Asia-Pacific region, which accounts for
                                       more than one-third of global lubricant demand.
                                       Growing competition from NOCs is of severe concern to global suppliers. Ambitions of nationalized
                                       companies are a major threat to their global market share. Petronas acquired Italian Selenia, which
                                       has a good hold in the lubricant business in Brazil and Europe. Similarly, Petrobras acquired
                                       Chevron’s lubricant business in Chile. Total acquired Exxon Mobil’s lubricant business in Vietnam.
                                       Many NOCs have made it into the top 20 leading lubricant manufacturers by volume in 2009.
                                       PetroChina and Sinopec from China, Total from France, and many other NOCs are setting up
                                       foreign offices, expanding outside local markets.
                                       IOCs are now playing it safe by adopting strategies which are successful even inside largely NOC-
                                       controlled markets. IOCs are moving their interest more towards the hi-performance lubricant
                                       market that requires advanced technology and premium pricing.




Lubricants Industry to 2015 - Surge in Automotive Market in                                               GBIGE00043MR / Published APR 2011
Emerging Economies Driving Demand
                                                                                                                                         Page 2
                                                                          © GBI Research. This is a licensed product and is not to be photocopied
                                       1         Table of Contents
                                       1   Table of Contents ........................................................................................................................ 3
                                           1.1    List of Tables..................................................................................................................... 4
                                           1.2    List of Figures ................................................................................................................... 5
                                       2   Lubricant Industry to 2015 – Surge in Automotive Market in Emerging Economies Driving
                                           Demand ....................................................................................................................................... 6
                                           2.1    Report Guidance ............................................................................................................... 6
                                       3   Overview of the Lubricant Industry .............................................................................................. 7
                                           3.1    Lubricants ......................................................................................................................... 7
                                           3.2    Refining and Blending – Formulation of Lubricants........................................................... 7
                                              3.2.1    Refining of Crude Petroleum ..................................................................................... 8
                                              3.2.2    Desirable Properties of Lubrication Oils .................................................................. 10
                                              3.2.3    Blending with Additives ............................................................................................ 10
                                           3.3    Lubricants Classification and Industry Definitions ........................................................... 11
                                              3.3.1    General Classification of Lubricants ........................................................................ 11
                                              3.3.2    Classification of lubricants by application ................................................................ 12
                                              3.3.3    Classification of lubricants by additives ................................................................... 12
                                              3.3.4    Base oils .................................................................................................................. 13
                                           3.4    Industry Structure............................................................................................................ 13
                                           3.5    Industry Composition ...................................................................................................... 14
                                           3.6    Marketing ........................................................................................................................ 15
                                       4   Global Lubricant Industry – Key Trends and Challenges........................................................... 16
                                           4.1    Chinese and Indian Automobile Sector Driving Lubricant Demand................................. 16
                                           4.2    Oil Majors Facing Global Competition from National Oil Companies .............................. 17
                                           4.3    Brazil, Russia, India and China Building Demand After Recession................................. 17
                                           4.4    Metalworking Fluids Market Faltered due to Recession.................................................. 17
                                           4.5    Lubricants in China and India Leapfrog Quality Levels ................................................... 18
                                       5   Global Lubricant Demand to 2015 ............................................................................................. 19
                                           5.1    Global Lubricant Demand to 2015 .................................................................................. 19
                                           5.2    Global Lubricant Market Size to 2015 ............................................................................. 21
                                           5.3    Relationship Between Lubricant Demand Per Capita and GDP Per Capita .................... 22
                                           5.4    Global Motor Vehicle Outlook ......................................................................................... 23
                                           5.5    Global Industrial Outlook ................................................................................................. 25
                                           5.6    Global Lubricant Demand by Region .............................................................................. 26
                                              5.6.1    Lubricant Market, Asia-Pacific ................................................................................. 26
                                              5.6.2    Lubricant Market, Americas ..................................................................................... 28
                                              5.6.3    Lubricant Market, Europe ........................................................................................ 30
                                              5.6.4    Lubricant Market, Middle East and Africa ................................................................ 31
                                           5.7    Global Lubricant Demand by Market ............................................................................... 32
                                              5.7.1    Automotive Oil Market ............................................................................................. 32
                                              5.7.2    Industrial Oil Market................................................................................................. 33
                                              5.7.3    Metalworking Fluids, Greases and Others ............................................................... 34
                                           5.8    Global Lubricant Demand by Formulation, 2009 ............................................................. 35
                                           5.9    Global Lubricant Demand by Product, 2009 ................................................................... 36
                                       6   Lubricant Market, Competitive Strategies .................................................................................. 37
                                           6.1    Low Cost to Market Approach ......................................................................................... 37
                                           6.2    Differentiation Approach ................................................................................................. 37
                                           6.3    Niche Approach .............................................................................................................. 37
                                              6.3.1    Companies Using These Three Competitive Strategies .......................................... 38
                                       7   Lubricant Market, Major Players ................................................................................................ 39
                                           7.1    Royal Dutch Shell ........................................................................................................... 40
                                              7.1.1    SWOT ANALYSIS ................................................................................................... 40
                                           7.2    Exxon Mobil .................................................................................................................... 44
                                              7.2.1    SWOT ANALYSIS ................................................................................................... 44


Lubricants Industry to 2015 - Surge in Automotive Market in                                                                          GBIGE00043MR / Published APR 2011
Emerging Economies Driving Demand
                                                                                                                                                                                 Page 3
                                                                                          © GBI Research. This is a licensed product and is not to be photocopied
                                         7.3    British Petroleum............................................................................................................. 49
                                            7.3.1     SWOT ANALYSIS ................................................................................................... 49
                                         7.4    Chevron .......................................................................................................................... 54
                                            7.4.1     SWOT ANALYSIS ................................................................................................... 54
                                         7.5    PetroChina ...................................................................................................................... 58
                                            7.5.1     SWOT ANALYSIS ................................................................................................... 59
                                         7.6    Sinopec ........................................................................................................................... 63
                                            7.6.1     SWOT ANALYSIS ................................................................................................... 63
                                         7.7    OAO Lukoil...................................................................................................................... 66
                                            7.7.1     SWOT ANALYSIS ................................................................................................... 67
                                         7.8    Total S.A. ........................................................................................................................ 70
                                            7.8.1     SWOT ANALYSIS ................................................................................................... 70
                                       8 Appendix ................................................................................................................................... 74
                                         8.1    Methodology ................................................................................................................... 74
                                            8.1.1     Coverage ................................................................................................................. 74
                                            8.1.2     Secondary Research ............................................................................................... 74
                                            8.1.3     Primary Research .................................................................................................... 75
                                            8.1.4     Expert Panel Validation ........................................................................................... 75
                                         8.2    Abbreviations .................................................................................................................. 75
                                         8.3    Contact Us ...................................................................................................................... 76
                                         8.4    About GBI Research ....................................................................................................... 76
                                         8.5    Disclaimer ....................................................................................................................... 76


                                       1.1       List of Tables
                                       Table 1:       Products of Fractional Distillation ..................................................................................... 8
                                       Table 2:       Desirable Properties of Lubricants ................................................................................. 10
                                       Table 3:       Additives Used in Base Oil ............................................................................................. 10
                                       Table 4:       Types of Mineral Lubricants ........................................................................................... 11
                                       Table 5:       Types of Synthetic Lubricants ........................................................................................ 11
                                       Table 6:       Classification of L
				
DOCUMENT INFO
Description: Lubricants Industry to 2015 - Surge in Automotive Market in Emerging Economies Driving Demand Summary GBI Research’s new report, “Lubricants Industry to 2015 – Surge in Automotive Market in Emerging Economies Driving Demand”, provides an in-depth analysis of the Global Lubricant Industry and highlights the various concerns, shifting trends and concerns around the globe. The report provides forecasts for the Lubricant Industry to 2015. The report also provides forecasts of Global Lubricant Demand to 2015 by Region, by Market, by formulation and by Product. The report gives the SWOT analysis of various major players of the Lubricant Market. The report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research’s team of industry experts. The global automotive industry is back on the growth path after the setback caused by the financial crisis of 2009. The industry is now actively pursuing innovative new technologies, production and business techniques. Although it is on a growth path, the fact remains that it will take a long time for it to recover. Asia has recovered well as compared to the West, and this is reflected in the growing automobile numbers. China, the world’s largest automotive market, showed a more than 20% growth in December 2010 China and India seem to have weathered the financial crisis storm, compensating for the decline in lubricant demand in the rest of the world. In 2009, these countries took over the automotive production leadership position, with over 14 million units – a surge of more than 48% over 2008 – and well over 10 million more than the total production of the US, Canada, and Mexico combined. In India, the production growth was less dramatic. Scope The report provides in-depth analysis on the Global Lubricant Market. Its scope includes - - Overview of lubricant Industry, Refining and Blending and Formulation of Lubricant and various classifi
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