Lubricants Market

The global lubricants market size was valued at USD 125.81 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 3.7% from 2021 to 2028. The industry dynamics are changing, in terms of raw material, owing to the rising demand for bio-based lubricants. The growing trade of vehicles and their spare parts is anticipated to fuel the demand for automotive oils and greases. The major economic recovery in North America and Europe is expected to boost the consumer vehicles segment, which, in turn, is a boon for the market. Typical lube manufacturers use crude oil, CBM, tight oil, and other additives to formulate all types of lubricants. Major companies, such as Royal Dutch Shell, Total SA, Chevron, ExxonMobil Corporation, British Petroleum, and Sinopec, have integrated their business operations globally. It ensures a steady raw material supply to manufacture mineral oils & additives needed for production.

However, many other manufacturers have definitive contracts with raw material manufacturers as well as suppliers. This strategically enables these companies to reduce uncertain time and price losses in the procurement of these materials. Lubricants are majorly used as diesel engine oils, gearbox & transmissions in passenger cars, commercial vehicles & motorcycle segments of the automotive sector. Growing automobile sales are expected to augment the global industry growth over the forecast period. Global automotive sales have been on the rise primarily driven by countries, such as India, China, the U.S., and Brazil.

Growth drivers for the manufacturing sector in these markets include favorable foreign investment norms, availability of a large pool of skilled labor & technological know-how. High growth in niche manufacturing sectors, such as 3D printing & medical devices, is expected to further complement the industrial growth in these markets. Hence, rapid industrialization in BRICS is expected to drive industrial fluids demand, which, in turn, is expected to complement the global lubricants sector growth.

Major companies in the market are running a consumer-centric business, which has led to a high level of innovations, in terms of distribution timeline reductions and enhanced accessibility of the products. Many manufacturers have established ground-level distribution channels with regional suppliers that enable them to focus on other aspects of the business, such as quality improvisation, product portfolio enhancement, and more, thereby leaving distribution handling to the dedicated sources with a broader reach and market knowledge.

The industry is characterized by a high number of new market entrants that are seeking to tap the lucrative opportunities in the global market; while existing players are entering into strategic collaborations to increase capacities & expand their reach into emerging markets. The joint venture, merger, and acquisition activities in the industry have increased significantly over the past decade. Companies constantly seek to establish long-term contract agreements with trusted partners for sustainable business operations globally.

In terms of volume, the automotive segment dominated the market with a share of more than 57% in 2020. This high share is attributed to the increased sales of consumer automotive, such as trucks, busses, and other forms of passenger transport. Economic growth in emerging countries, such as China, India, and Brazil, has led to the betterment of public transportation in these regions. This trend is expected to strengthen commercial automotive oil demand, thereby supporting segment growth over the forecast years.

Increasing industrial production in emerging markets of Asia Pacific and Latin America is anticipated to drive industrial oil products demand over the forecast period. Mining, unconventional energy, and chemicals industries are projected to be among the largest markets for industrial lubricants. This trend is expected to boost the demand for industrial lubricants in applications, such as industrial engines, compressors, hydraulics, bearings, and centrifuges.

Marine lubes are widely used in high- and medium-speed engine oils and slow-speed marine engines. The product helps enhance the engine life and protects the components at high temperatures. Some of these products offer additive technology to provide protection against crankcases, camshaft areas, under-crowns, and ring belt. Furthermore, lubricants are used in slow-speed cylinders as they offer high-performance lubrication, enhanced protection from mechanical wear, and help mitigate cold corrosion.

Aerospace lubricants are used to provide reliability, long-lasting lubrication for critical components to operate efficiently in high vacuum and extreme temperatures. They undergo regular scrutiny with increasing regulatory intervention and specific military standards. Increasing air passenger traffic coupled with a significant rise in defense budgets across the globe are anticipated to remain the key driving factors for segment growth over the forecast period. Countries including the U.S., Germany, India, and Brazil have made a substantial increase in defense spending resulting in a rapidly expanding aerospace sector.

Asia Pacific dominated the global market with a volumetric share of over 43% in 2020 and will expand further at the fastest CAGR from 2021 to 2028, in terms of volume as well revenue. This is attributed to the increasing growth in the base oil movement, rapid industrialization & urbanization, rising population, and high growth in major end-use industries, such as textiles, chemicals, food processing, and metalworking. The market presents several lucrative opportunities to innovators who tap into niche applications and introduce newer products with advantageous product characteristics. Moreover, major industry players are also shifting their production facilities to Asia Pacific owing to the presence of low-cost labor, ever-increasing demand, and favorable government policies.

Europe has a high growth potential for industrial lube products due to rapidly growing chemical manufacturing facilities in the region. The heavy growth is largely driven by the intervention of several multinational chemical manufacturers across countries, such as Russia, the U.K., France, and Germany. These industrial lubes are by large utilized for multiple applications, such as the production of fertilizers, rotatory as well as compressor units in manufacturing units, and more, which helps in multiple-fold increase in operating cycle as well as the performance of machinery that undergo severe stress.

Latin America is projected to formulate several trade strategies to attract Foreign Direct Investment (FDI) for infrastructure development. Various policies to promote investment and partnerships with the private sector have been formulated to address port and transportation infrastructure opportunities across the region. Brasil Terminal Portuario, one of the busiest container ports in Latin America, is also planning multiple terminal development projects in Moin, Costa Rica, Mexico, and Peru. These initiatives, in turn, are expected to boost product demand in the region’s marine industry in the coming years.

Most MEA countries are highly dependent upon crude oil production and the consequent revenue generated from this industry. Numerous countries in this region have undertaken efforts to diversify their economies in an attempt to reduce the dependency on crude oil. This, in turn, has fostered industrial development and boosted the demand for industrial machinery supporting market growth.