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China to be a key growth market for lubricant makers

Once the COVID-19 outbreak passes, China is set to become an important market for driving the demand for advanced lubricants, according to a new study from Kline.

Aside from some producers making in-demand products, manufacturers have little to cheer about at present, especially the larger lubricant brands like Shell, Total, Mobil, and Castrol, whose upstream operations are being impacted by low oil prices. Looking forward, though, Kline expects China to pursue efforts to reduce its greenhouse gas emissions and lower air pollution. This will need upgraded equipment for automobiles and manufacturing, and this in turn will create new demand for advanced lubricants.

Reducing emissions is a priority for the government in China, where the levels of some harmful particles remain above standards set by the World Health Organization despite drastic reductions in recent years. Once focus shifts away from managing the COVID-19 pandemic, there is likely to be a push towards cleaner manufacturing processes, energy, and vehicles.

More than half of the nation’s energy generation is currently coal-based, and there be will a big push to reduce this through a shift towards renewables like wind power, as well as natural gas.

David Tsui, a project manager at Kline, suggested:

“What we can expect here is a growth in turbine and compressor oils, which will be increasingly synthetic. This will again be good news for local majors and multinationals with strong OEM partnerships that can supply technologically advanced products, though perhaps local minors will struggle to compete.”

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