China clearly in the driver’s seat

China is clearly in the driver’s seat of global lubricants demand, amidst a global landscape of shrinking lubricant demand, according to Lutz Lindemann, a member of the executive board of Germany’s Fuchs Petrolub SE, the largest independent global lubricant manufacturer.

Speaking at the Uniti Mineral Oil Technology Conference in Stuttgart, Germany, yesterday, Lindemann also said that total global lubricants demand in 2000 was 36.4 million tonnes, which declined to 32.2 million tonnes in 2009 due to the global economic recession, and “astonishingly” has not recovered. In 2014, global lubricants demand was at 35.4 million tonnes, he calculated, which is just slightly better than 2013. These figures do not include marine oils.

This in itself may not seem significant, as global economic growth continues to sputter. However, when you compare the growth of the vehicle population during the same time period, the conclusion is clear, he said. There is a decoupling between GDP growth and lubricant consumption. In 2000, there were 750 million cars on the road and today that number is more than one billion, which translates to a 30% decline in overall lubricant consumption, he said.

“One would expect that the lubricants demand would go through the roof, but [instead] it decreases. This is due to the better efficiency of engine oils,” Lindemann said.

Better vehicle technology also is a contributing factor. This has been seen in North America and now is also happening in Asia-Pacific, “more quickly,” as the demand in China leans toward very high-level cars and advanced manufacturing.

Lindemann showed that since 2010, China’s gross domestic product (GDP) has been steadily rising, and lubricant demand has also been rising, but not as quickly. He attributed this to what he termed as the “Lubricant/GDP gap.” In the old days, lubricant demand naturally rose with GDP, but that is no longer the case, he showed. In 2014, he calculated a global “Lubricant/GDP gap” of minus 2.8%. He attributes this gap to the decoupling between automotive/industrial production and lubricant demand. A higher GDP allows a country to invest in better technology, which results in higher efficiencies, and translates to lower lubricant consumption, which is what is now happening in China.

The projection for global economic growth in 2015 is relatively flat, he said. But, “The driver for the lubricants market….is clearly China,” Lindemann said. China’s economic development will continue, and its lubricant demand will continue to grow, as China’s per capita lubricant demand is still relatively low at 5.1 kilograms (kg.) compared to the United States’ 19 kg. But China’s lubricant consumption growth will not be proportional to its economic growth.