ILMA Compoundings July 2017 - 15

implications for the lubricant industry in the region. For
example, analysts expect the growth rate of the automotive
industry to slow down, and other European Union members
leaving would lead to further softening of the market.
In the U.S., the Trump administration could bring about
changes in the terms of established free trade agreements,
including the North American Free Trade Agreement
(NAFTA) and others, with the rest of the world.
"Trump wants to focus on bilateral deals and renegotiate
NAFTA," said Jonathan Berkshire Miller, director and co-founder
of the Ottawa-based Council on International Policy.
Despite global political uncertainties, the potential lubricant market growth in the Middle East and Africa is significant. The regions are estimated to have a compound annual

growth rate of 3.3 percent from 2016 to 2021, according to
U.S.-based Orbis Research.
For example, Nigeria, one of the largest finished-lubricant
consumers in continental Africa, is a generator-powered
economy, the main driver of finished lubricants. Kline &
Co., an international consulting firm, estimates this segment
to have 39 percent share of the total demand for lubricants
for the continent.
"Almost every house, corporate office and medium to small
business in areas across the country operates at least one
generator to provide electricity," said the company's blog.
The company estimates that 45 percent of Nigerians use
gasoline-fueled generators ranging from 0-2 kVa because of its
cheap maintenance and low fuel consumption. Middle-class
families and small businesses use gasoline-fueled generators
ranging from 0-5 kVa with a combined annual consumption
of about 106.0 kilotons of lubricants.
"Demand for mono-grade or motorcycle oils will see a
positive correlation to the implementation of petrol-fueled
generators," said Kline & Co.
South America, with an estimated 5 percent of global
trade, is expected to have a GDP growth rate of 2.5 percent
per year until 2020. The South American finished lubricants
market is about 2.4 MT, and the top countries are Brazil,
Argentina and Colombia.
"The leading applications in the region are heavy-duty
motor oils, passenger car motor oils and process oils, with
automotive lubricants having more than 60 percent
of the market," said Sergio Rebelo, managing
director in Kline's South America affiliate,
Factor.
Brazil, the leader of finished lubricant demand, has about 50 percent
share for the region and "although
the finished lubricant segment has
declined by about 15 percent since
its 2013 peak, long-term perspectives
for the region remain attractive overall," he added.
With a low vehicle population compared to Europe and the United States,
lubricant demand is expected to grow as the
economy recovers.
"We expect the main factors affecting the attractiveness of
the South American lubricants industry will improve over
the next five years. Growth will return, but in a softer way,"
Rebelo noted.
Although lubricant market growth for each country
varies, the global lubricant market is showing a significant
preference for higher-quality lubricants. In the automotive

ILMA Compoundings July 2017

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