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Post-COVID-19 outlook for global general industrial oils and grease markets
The global general industrial oils (GIOs) and grease market was growing slowly at a 0.2% CAGR from 2014 to 2019. But with the arrival of the COVID-19 pandemic, the market has been driven from low to negative growth, with some industries not likely to fully recover even by 2024, according to Kline’s latest analysis of the sector.
The market analyst’s most-likely COVID-19 scenario estimates the 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. 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 COVID-19 shutdowns.
GIOs and greases account for nearly one-fifth of the overall global lubricant demand (excluding process oils). The top industries that consume these lubricants are manufacturing, primary metals, mining and power generation. Globally, the COVID-19 pandemic has shuttered many industries deemed non-essential and has affected many major industries. Some, such as power generation, have seen a lower impact, but others, such as manufacturing, have seen a much greater impact to their business and consumption of GIOs and grease.
Transportation equipment manufacturing has been hit especially hard, as it faced a trifecta of issues that started with China’s shutdown (China is home to many of the manufacturers that supply auto parts). The industry then faced shutdowns at manufacturing plants and at dealerships; now it is facing economic uncertainty and high unemployment, which is likely to make many customers hold off on new vehicle purchases.
Shell and ExxonMobil continue to lead this market, estimated to account for more than 25% of the entire GIO and grease market combined. These two majors have extensive technical expertise in lubricants and long-standing OEM ties not easily replicated by other lubricant marketers.
Currently, the global recession caused by COVID-19 remains the most significant challenge to the industrial segment. In the long term, the impact on lubricants consumption due to major shifts in supply chains, consumer behaviour and other impending effects of this pandemic will uncover further shifts and changes.
Some of the early changes include offshoring manufacturing from China to local neighbours to help provide a buffer if another major pandemic causes China to shut down again.
‘The impact of the pandemic has been two-fold,’ says David Tsui, Project Manager of the study. ‘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.’