Kline & Company predicts a volatile 2012 for the lubricants market

The international consulting research firm Kline & Company said that despite the 6% rebound of the global lubricants market and a promising start in 2011, the industry’s growth has slowed down. Geeta Agashe, vice president of Kline’s Petroleum & Energy Practice, said that Kline & Company predicts a flat global lubricants market in 2011, and a volatile 2012. But Agashe is quick to add, “Where there is change, there is opportunity and it’s thus imperative to be informed and prepared.” Kline’s annual report Global Lubricants Market Analysis and Assessment attributes the firm’s extrapolation to several factors:

• Asia’s new car sales growth has declined. China’s growth estimate for 2011 was at 3% compared to 30% last year while India, which enjoyed double-digit growth rate last year, is predicted to post only 2% growth. Agashe says the slowdown can be attributed to several factors: regional inflation; interest rate hikes by central banks; supply-chain disruption caused by the tsunami/earthquake in Japan; and lower exports due to demand.
• Germany’s healthy 11% growth for Q1-Q3 2011 was held in check by a 5% sales drop in the United Kingdom, an 11% drop in Italy and Spain’s 21% drop. But the exceptional performance of Germany is already slowing down in view of the eurozone’s demands. The weak markets of its neighbors are also resulting in fewer exports for Germany. An encouraging development is the 12% increase in vehicle sales in Europe over the same period in 2010. But with no solution in sight for the eurozone financial crisis, Kline predicts modest or no growth in car sales in the near future, a prospect that will weigh heavily on the lubricant industry’s recovery from the 2008-2009 lows.
• Russia and Brazil, fueled by large domestic economies, continue to grow. Car sales in Brazil rose by 7.5% over the last year. Brazil, with its strong currency, helps by driving consumer spending. But the global financial uncertainties are now affecting both countries and growth is slowing down.
• Q1-Q3 2011 car sales in the United States are defiantly up by 10% over the same period last year. Steel production remains resilient despite the near-universal slowdowns: Asia is declining at a rate of 0.7% per month (mainly due to China, but India continues to grow), the EU 27 is declining at a rate of 7.7% per month, Germany at 4%, France at 11% and Italy at 19% per month.

(November 8, 2011)