Industrial lubricants may buck economic trends post lockdown

The coronavirus pandemic has turned into a watershed event. Most things are being looked at as pre-corona and post-corona. Every industrial sector is looking at the post-corona era with trepidation and uncertainty. Though most sectors may take quite a long time for recovering, the industrial lubricants market should recover comparatively sooner. Especially, in India things look brighter for the industry with a colossal market at its disposal.

Asia-Pacific (APAC) has been the largest industrial lubricants market, on account of swift industrialisation in emerging economies such as India and China. In addition to this, modernisation of industrial machinery is predicted to play a significant role in the growth of the domain in the APAC region. The post-lockdown resumption in manufacturing and industrial activities in the developed countries is also expected to result in the rising demand for industrial lubricants in the years to come.

Industrial lubricants are fluids, liquids, and greases that are utilized for lessening the wear and tear of materials while reducing friction and binding. The lubricants can also prevent corrosion from both outer and inner surfaces where they are applied. This growth of the metalworking industry is additionally resulting in the rising need for industrial lubricants, which are quite common in a number of other industries as well. As per a P&S Intelligence report, in 2016, the global industrial lubricants market generated a revenue of $48,860.7 million and is predicted to reach a value of $68,412.0 million by 2024, registering a growth of 4.3 per cent CAGR during the forecast period (2017–2024).

There are different product types of industrial lubricants such as engine oil, process oil, metalworking fluid, and general oil. Some other product types are turbine oil, industrial gear oil, chainsaw oil, compressor oil, demolding oil, and lubricating grease. The largest usage in the past was made of primary oils in different industries, as primary oil makes the functioning of industrial machinery smooth by keeping the temperature constant and decreasing the friction between the components. The demand for these oils for several manufacturing processes is further expected to increase in the near future due to swift industrialisation in countries including China and India.

Apart from metalworking industry, industrial lubricants also find applications in energy, textiles, food processing, chemical manufacturing, and hydraulic machinery industries. Out of these, the largest demand for industrial lubricants was created by the chemical manufacturing industry, since these lubricants aid in enhancing the manufacturing process, keep the contamination of chemicals in check, and preventing the machine temperature from rising too much. For instance, machines pressed into production of nitrogen fertilizers must bear extreme pressure and temperature, while being compatible with ammonia and catalyst, which is why industrial lubricants are used for applications in polymers, industrial gases, and fertilizers manufacturing processes.

The industrial lubricants market is already fragmented, and the extent of fragmentation should be accelerating during the forecast period that is between 2017 and 2024. Indian Oil Corp. Ltd., Oil and Natural Gas Corp. Ltd., BP Plc, China National Petroleum Corp., Exxon Mobil Corp., FUCHS PETROLUB SE, Idemitsu Kosan Co. Ltd., PJSC LUKOIL, Royal Dutch Shell Plc, and Total SA are a few of the major stakeholders in the market. Despite the fact that the increasing demand from end-user industries will offer immense growth opportunities, the weak global economic scenario will challenge the growth of the participating companies. However, to make the most of the opportunities, market vendors have to focus more on the growth prospects in the fast-growing segments, while simultaneously, maintaining their positions in the slow-growing segments.

Indian Oil Corp (IOC), India’s largest oil firm, recently said it has boosted refinery run rates to nearly 83 per cent of the capacity after the demand for fuel almost doubled with the easing of the coronavirus-led lockdown. The state-run refinery had cut its overall run rate by 25-30 per cent in March to adjust operations due to slump in demand. It began raising throughput in May after some lockdown restrictions were eased.

IOC, in a statement, said, “The crude oil supply of IOC refineries crossed 80 per cent as on date, with consumption of all petroleum products put together almost doubling in May 2020 as compared to April 2020 levels.”

The oil major’s nine refineries saw throughput gradually being raised from about 55 per cent of rated capacity at the beginning of May to about 78 per cent by the month-end, and 83 per cent as on date, it said. India has been emerging as one of the leading producers of the key industrial ores and minerals.

With technological advances and more mechanization of the whole process, it is expected that demand will be higher for industrial lubricants for efficient and optimum operation of mining equipment as they are used under extreme temperature and pressure conditions requiring regular lubrication. Also, mining operations in the eastern mining belt which were witnessed to stop before are now getting recovered as a result of which, possible mining recovery could be a significant volume driver in the future.

In India, among various types of industrial lubricants, gear and compressor oil lubes are emerging on top. Apart from that, lube manufacturers are also in an advanced stage to develop and establish low-cost manufacturing platforms that would support mass production in the near future. Rising demand for industrial greases for major industrial applications to maintain smooth functioning of machines is another key factor.

Energy efficiency, extended maintenance intervals, increased thermal stress, reduced sump sizes, higher operating loads and speeds are some of the leading drivers which should also jack up the demand for synthetic as well as semi-synthetic lubes in the foreseeable future.

General manufacturing businesses in India are further estimated to increase in the near future, especially the manufacturing processes of electronic components owing to its rising demand among the country’s population. The government of India in January, 2018 has approved a total of 18 electronic manufacturing clusters in 12 states of India and another 90 manufacturing units have been booked towards seeking approval. New establishments would create a positive demand on the utilisation of industrial lubricants to increase the efficiency as and output of machines used in the electronic manufacturing processes.

All said and done, in view of the morbid economic situation the lubricants industry still holds a ray of hope. We can expect the industry to buck the trend and contribute its two cents bit to the national economy. Although the automobile industry has taken a major beating during the last year or so there are other segments to boost the lubricants market especially manufacturing and machine tools.

Article by Arijit Nag
Arijit Nag is a freelance journalist who writes on various aspects of the economy and current affairs.
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