Scant Growth Forecast for 2019
STUTTGART, Germany — Global lubricant demand – excluding marine oils – is expected to increase 0.5 percent to 36.6 million metric tons this year, according to a presentation given at the Uniti Mineral Oil Technology Forum held here earlier this month.
“We see a growth in global demand of 0.5 percent for 2019, provided that the developments that can potentially impact upon demand do not accelerate,” Fuchs Petrolub SE’s Chief Technology Officer and executive board member Lutz Lindemann told the conference.
Last year, global lube demand came out at 36.4 million tons, with the Asia–Pacific region, the Middle East and Africa taking up some 54 percent, Fuchs estimates. The Americas had a 27-percent share in demand, while the remaining 19 percent came from Europe.
Automotive oils constituted 57 percent of global demand, followed by industrial oils with 26 percent, according to Fuchs. Process oils, metalworking fluids and greases accounted for 8 percent, 6 percent and 3 percent, respectively. The share of automotive oils was up around 2 percent over 2007 levels, mainly on account of rising vehicle sales in China. “China is starting to dominate the product split in the world’s lubricants market,” Lindemann concluded.
China was the largest single lubricants market in 2018, with 7.2 million tons, which was 4.5 percent higher than 2017. Lindemann believes this rate of expansion is probably not sustainable, saying it will eventually decrease to 1 to 2 percent. The Asia-Pacific market, driven by Chinese demand, will grow by 1 percent to around 15.75 million tons in 2019.
While demand in the United States hit almost 6.1 million tons last year, it is expected to fall well below the 6-million mark this year, declining at a compound annual rate of 1 percent, Lindemann claimed.
Although he expects demand in Europe is likely to remain level at roughly 6.8 million metric tons in 2019, Lindemann anticipates the region’s demand will offal 1 percent. Only a handful of markets saw lubricants demand expand over the past decade, including Iran, Saudi Arabia and Turkey, and not many are expected to expand over the next year.
“The expected downward trend in the European market is mainly due to efficiency gains and deindustrialization. Eastern Europe, the Polish market in particular, is the most stable. That said, we do not expect movement on the European market other than a steady decline”, Lindemann explained.
He identified three main disruptive challenges to the global market: E-mobility, sustainability and digitization, with the latter mainly affecting existing business models. The drive to reduce carbon dioxide emissions seems to have focused on the promotion of battery-powered vehicles, said Lindemann, who added that this is not necessarily a good thing.
“Are BEV’s the answer to all our problems? I doubt that very much. There are alternatives to BEV’s in making our society more sustainable, such as e-fuels. However, these alternatives often do not receive the necessary support from our politicians,” he said.
Lindemann noted that a shift toward electric vehicles will not only affect demand for automotive oils, but also for metalworking fluids. “BEV’s have far fewer components, so the number of parts to be machined is likely to be reduced by some 80 percent.”
On top of that, there is the hidden risk of autonomous driving, he said. “The impact of autonomous driving with electric vehicles is not yet quantifiable, but it is sure to lead to a reduced number of cars on the road, which in turn will affect the traditional industrial backbone of countries such as Germany and the U.S.”
Overall, Fuchs estimates that electric driving will reduce global lubricants demand by 2 percent to 3 percent in 2030. Electric driving will hit demand in Europe the hardest, with Fuchs projecting a drop in demand for automotive oils as high as 20 percent. Demand for fluids for metal-processing will fall by 30 percent.
A growing emphasis on lifecycle assessments and efforts to make economies more circular pose a risk sustainability may lead to overregulation, Lindemann cautioned. “The upcoming regulatory and audit formats are a nightmare, and they will distort the traditional value chain, which our industry can only handle to a certain extent.”
According to Lindemann, the availability of certain raw materials could become restricted, especially since a framework for quantifying sustainability is still lacking. For this reason, the Union of the European Lubricants Industry. formed a Sustainability Task Force. The panel is supposed to function as a think tank initially but will evolve into a fully-fledged committee under the UEIL.