Kline predicts oil grease market recovery
From 2014 to 2019, the global general industrial oils (GIOs) and lubricating grease market was growing slowly at a 0.2% CAGR (compound annual growth rate). The arrival of Covid-19 saw the market move from low to negative growth, with some industries unlikely to fully recover, even by 2024 - according to Kline’s recently published report, ‘General Industrial Oils and Grease: Global Market Analysis and Opportunities’.
The most-likely Covid-19 scenario estimated by Kline states that 2020 overall decline in GIOs and greases to be around 13%. However, a strong recovery with a CAGR of 2.7% is expected between 2020 and 2024. The report also illustrates that while North America is projected to see the greater rate of decline, developing markets such as Africa and the Middle East are estimated to grow quickly once they begin to recover from the recent shutdowns.
A drop in demand
The top industries that use GIOs and greases, which account for nearly one-fifth of the overall global lubricant demand, are manufacturing, primary metals, mining, and power generation. With the pandemic shutting down many industries that are deemed ‘non-essential’, manufacturing, and particularly transportation equipment manufacturing, has been heavily impacted and so therefore has its consumption of GIOs and grease.
China, which is home to many auto part manufacturers, faced numerous shutdowns at manufacturing plants and dealerships. It now faces economic uncertainty and high unemployment, likely to make many customers hold off on new vehicle purchases.
With extensive technical expertise in lubricants and long-standing OEM ties, Shell and ExxonMobil continue to lead this market, estimated to account for more than a quarter share of the entire GIO and grease market combined.
Further changes expected
The global recession caused by Covid-19 remains the most significant challenge to the industrial segment currently. In the long term, the impact on lubricant consumption due to major shifts in supply chains, consumer behaviour, and other impending effects of this pandemic will uncover further changes and shifts.
Some of the early changes include offshore manufacturing from China to local neighbours to help provide a buffer if another major pandemic causes China to shut down again. Kline is continuing to monitor these changes across the industries to track their long-term effects on lubricant consumption.
David Tsui, Project Manager of the study, said; “The impact of the pandemic has been two-fold. The immediate impact is a shutdown of non-essential businesses and people sheltering at home however, the staggered spread across the globe caused the customer base of manufacturers to return from shutdown to find no market for their products. Only those lubricants marketers who can help their customers weather this pandemic are likely to create long-term partnerships and take advantage of the 2020 to 2024 growth as economies open back up.”