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A study published by Kline & Company last week stated that the rapid economic growth in China will lead to more goods and people, which will increase the number of heavy vehicles such as trucks and buses, so heavy-duty motor oils , HDMO) vendors will get more business opportunities in China. The consulting company stated that the annual growth rate of China's highway commercial vehicle lubricants market is 10% and it is expected that this momentum can be maintained for five years. In addition, HDMO will also shift to higher quality types.
According to Fransvan Antwerpen, project manager of the Klein Oil & Energy business, “Highway products such as buses and trucks have accounted for about 46% of China’s total commercial lubricants market. With the continued economic growth, the transportation needs of people and goods are also increasing. As it grows, there will be more trucks and buses on the road, and these trucks and buses all need HDMO."
The Klein Research Report “Business Opportunities in China's Lubricants Market 2004-2009†(BUSINESS OPPORTUNITIES IN THE CHINESE LANGUAGES MARKET, 2004-2009) pointed out that China’s current demand for road lubricants for commercial vehicles is 927,000 tons, with a total output value of 1.1 billion US dollars.
The Chinese government announced that the economic growth in the second quarter was 11.3%, the fastest in ten years. Therefore, it is not surprising that Chinese trucks and buses are growing at this rate. But Klein said the types of cars and lubricants are also changing.
Li Wang, head of Klein’s office in Shanghai, pointed out: “Chinese buses are generally smaller than those in the United States and Europe, and have always been powered by gasoline. However, in order to accommodate more passengers more effectively, These smaller buses have been replaced by larger, diesel-powered buses, which will drive the transformation of passenger car engine oil used by China’s commercial highway sector into HDMO. Moreover, the Chinese government is striving for higher fuel. With economy and lower emissions, higher quality lubricants help achieve this goal."
At present, the state-owned oil companies monopolize the commercial vehicle lubricants market. Sinopec is the industry leader, accounting for 32% of the market share. PetroChina and Uni-President Petrochemical followed with 13% and 11% respectively. But Klein said that the increase in demand for high-quality HDMO has enabled major multinational manufacturers to be in a good position to supply the market. Currently, Chinese domestic manufacturers that supply more than two-thirds of commercial oil in the Chinese market have not yet prepared for the production of high-performance HDMOs that are needed for newer commercial vehicles.
Bill Downey, Kline’s vice president and head of the oil and energy business, said: “Indefinitely, Chinese manufacturers will increase the output of high-performance HDMO, but like BP, Shell and Exxon Mobil Transnational lubricant companies such as (ExxonMobil) have experience in meeting these lubricants needs, and they have established business relationships with foreign original OEMs of trucks to provide them with lubricants used in their factories because these OEMs Manufacturers need to specify what kind of lubricants consumers should use. Therefore, these multinational oil giants maintain their favorable position by fostering friendly relationships with OEM manufacturers."
Before they were ready to compete with multinational companies, Klein suggested that Chinese companies should use more Type II base oils and diversify the unity of product grades.
Kline's research report covers China's entire lubricants market. It expects the growth of non-road commercial lubricants to be much slower than highways, estimated at an annual growth rate of 4%. Although the construction industry is also booming, the company explained that the industry will introduce more efficient large-scale machinery.
China's lubricants market witnessed a 10% annual growth rate