COVID-19 Impact on Lubricants Market is estimated to reach USD 165.5 billion by 2021, from USD 164.3 billion in 2019
Some of the major players: Royal Dutch Shell Plc. (Netherlands), ExxonMobil Corporation (US), Chevron Corporation (US), BP p.l.c. (UK), Total S.A. (France), PetroChina Company Limited (China), Sinopec Limited (China), LUKOIL (Russia), Fuchs Petrolub AG (Germany), and Idemitsu Kosan Co. Ltd (Japan), among others
Lubricants include various compounds such as fluids, oils, and greases. Lubrication is an essential process for industrial processes, which helps to reduce the friction between moving parts or surfaces to enhance the efficiency of machines. Lubricants are manufactured using base oil, which is categorized as mineral oil, synthetic oil, and bio-based oil. Mineral oil and synthetic oil are sourced from petroleum crude, and bio-based oils are sourced from vegetable oils. The major factor that is driving the lubricants market is massive industrialization, the increasing disposable income, and rapid urbanization in emerging countries.
The COVID-19 outbreak is expected to have a negative impact on BP plc’s Q1 2020 results. For the next three quarters, the company is likely to reduce the organic capital spending by 25% from that of planned spending for 2020. The reduced spending will be USD 12 billion for 2020 in comparison to planned spending of USD 16 billion for the same period. In Q1 2020, the company reported upstream production to be lower than that of Q4 2019. The downstream refining availability is expected to be in a range of 95%-96%. The company also expects downstream businesses to be impacted by significant declining demand for fuel, jet fuels, and lubricants, as all countries across the globe implemented significant measures to overcome the spread of COVID-19.
The drop in oil prices and a decline in global demand due to COVID-19 are impacting oil and energy companies. Total SA is also facing the heat due to declining crude oil prices. The decline in crude oil prices has also impacted the other integrated businesses of the company. To sustain and overcome this scenario, Total plans to lower the capital expenditure by 20% to USD 15 billion, as compared to USD 18 billion planed earlier for the year. Subsequently, the company will delay the expansion plans and decrease capital expenditure to maintain liquidity. It is implementing a short-term strategy for increasing more savings in 2020 as compared to the planned amount. Now, it is targeting USD 800 million of savings on operating costs in 2020 as compared to USD 300 million planned previously. To boost liquidity, the company also suspended the share buyback program worth USD 2 billion.
Engine oil is expected to be the most affected product type segment of the lubricants market due to COVID-19.
The engine oil segment is expected to account for the largest share of the lubricants market in 2021, in terms of both volume and value. Engine oil is used mainly in ICEs, where its primary functions include lubrication and heat removal in the automobile and equipment engine. Engines are the most widely used machines, majorly used in vehicles and transport vessels. These engines form the basis of a vehicle function. Engine oil is the most common type of fluid being used in the industry.
Transportation accounts for the largest share in the lubricants market in 2021 and is expected to be the most affected end-use industry due to COVID-19.
Transportation is expected to account for the largest share of the lubricants market in 2021, in terms of both volume and value. This is due to the rise in vehicle count both in commercial and passenger segments, influenced by the increasing spending power in the developing nations. The growing emphasis on optimized supply chain and logistics will also have a positive impact on this market.
APAC is estimated to be the largest lubricants market in 2021
APAC is projected to lead the lubricants market in 2021, in terms of both volume and value. The increasing population, the rising expenditure in the industrial sector, and the growing vehicle count in emerging markets of China, India, and ASEAN countries are some of the major factors projected to drive the demand for lubricants in the region. Furthermore, improved lifestyle, increase in employment rate, rise in disposable income of the people, and increase in foreign investments in various sectors are making APAC an attractive market for lubricants manufacturers.