The V-shaped recovery forecast a year ago, in the depths of the great global recession, is now clearly under way and global forecasts for 2010 growth in real GDP is boosted to 4.5 percent - at least, according to Michael Mussa.
Output levels for the US have been revised upwards and, while the Eurozone seems to be lagging, there are very clear signs that the global economy is picking up. Naturally, this is good news for the Lubricants business.
The BRIC economies have shown a significant divergence. Chindia (China & India) have powered forward; Brazil had a slight recession. Russia, on the other hand, fell further and faster than virtually all the other economies, with an 8% decrease in GDP. Not exactly what you would expect from a “high growth BRIC”. However Russia is still being projected as one of the few high growth lubricants market – with all the competitive attention that entails.
In 2009 Russian volumes were down sharply 6% (in an more advanced economy – a much larger fall would be expected). Anecdotal reports suggest that the bottom & top end products are being squeezed, with customers trading down from foreign-imported Premium products to the “top quality" local products. I should note here that no statistics were offered at the WRAC Conference to confirm or deny this interpretation.
On the ground in Moscow it feels rather different. The Moscow car parc is even more dominated by foreign imports than last year, with official figures stating 70+% of new registrations and 62% of the lubricants market. My personal assessment was more than 90% of cars appeared to be imports – certainly in central Moscow – although outside the capital I am sure it is a different picture.
Whatever the figures, the traditional GOST standards are being swept away by the rising tide of higher quality international products. Imported vehicles are clearly transforming the market and requiring Russian lubricants producers to transform their businesses, move to global standards – or wither. In a free world, the choice is theirs!
Sebastian Crawshaw, Chairman OATS