Future prospects remain bright for ASEAN lubricants market despite pandemic

The ASEAN region accounts for about 8% of the global finished lubricants market. In comparison to developed markets, lubricants consumers in the Association of Southeast Asian Nations (ASEAN) member-countries are quite price sensitive, especially in the commercial automotive segment, where the use of monograde oils is still common. Low-quality, mineral-oil-based lubricants are still used in the region and are being sold by local suppliers, according to Kline.

Kline’s report entitled “Opportunities in Lubricants: ASEAN Market Analysis,” covers the lubricant markets of eight major countries in the region, including Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Thailand, the Philippines, and Vietnam.

Indonesia, with the largest population among ASEAN member-countries, also has the largest vehicle population, as well as a large industrial sector. Hence, it is the largest lubricants market in the ASEAN region, accounting for about one-third of regional lubricants demand. Thailand follows with a share of slightly more than one-fifth of overall regional demand.

“Thailand’s lubricants market is very competitive, with 150 to 170 brands. While Singapore is the third-largest market due to its large marine lubricants segment, if marine lubricants are excluded, Singapore’s demand will be close to that of Cambodia,” says Sushmita Dutta, Kline project manager.

“The lubricants market in Lao PDR and Cambodia are based on lubricant imports, with no significant indigenous capacity for lubricants blending. Even in Myanmar, lubricants demand is mostly fulfilled by foreign suppliers.”

Two-wheelers accounted for more than three-fourths of the vehicle population in the major ASEAN countries in 2019. As a result, motorcycle oils (MCOs) comprise a bigger market than passenger car engine oils. Two-wheelers are not only used for personal use but also by businesses for providing services such as food delivery, transportation, and courier services. In most countries, the population of two-wheelers is more than that of passenger cars, except Malaysia, where the car population exceeds that of two-wheelers.

Automotive lubricants in ASEAN region accounted for a larger share than industrial lubricants because the region is not as industrialised as developed countries. Despite having a small share in the vehicle parc, commercial vehicles accounted for a high share of automotive lubricants. This is because commercial vehicles, such as trucks and buses, have larger sump sizes than personal use vehicles such as cars and two-wheelers and more frequent oil changes.

Within the commercial segment, monograde oils accounted for a significant share of total heavy-duty engine oil demand in the eight ASEAN countries in 2019. Older, on-highway vehicles, as well as off-highway equipment, account for high monograde oils’ demand in these markets.

Demand for industrial lubricants was higher than commercial lubricants only in Indonesia and Thailand, the two largest lubricants-consuming countries among the eight ASEAN countries covered in this report. Process oil was the largest industrial oil category.

In terms of suppliers, Shell and Pertamina are the leading suppliers, with more than one-third of the total demand in key countries. Major multinational oil companies such as Shell, BP, Chevron, and ExxonMobil collectively accounted for more than a third of the covered market.

Despite a major setback due to the Covid-19 pandemic, future prospects for the lubricants market in the ASEAN region remain strong over the forecast period. Overall lubricants demand in these select countries in ASEAN is expected to grow at a moderate compound annual growth rate (CAGR) of 2.0% from 2019 to 2029. The growth rate is expected to be higher for the period 2024 to 2029 as the economies  recover from the negative impact of pandemic by 2024. Continuing industrialisation and urbanisation will drive growth. Covid-19, with the resultant prolonged lockdowns, could drive lubricant market demand by 7% to as much as 17% in 2020.