China's industrial lubricant demand is set to outstrip supply, according to a new report, while base oil production in the US and Russia is booming.
According to the report from GCiS China Strategic Research, entitled "Assessment of China's Market for Industrial Lubricants", future revenue growth could increase by as much as 13% as a result of prices increases due to scarcity of local supply. The current market is estimated at 3.5 million tons of predominantly manufacturing, construction, metallurgy and mining lubricants; a level which was reached at the end of 2010 and showed a 5% increase in the previous year.
Another factor in the cost hike for the Chinese market is, according to the report, an increased demand for higher performance lubricants, with increasing take-up of Class III Base Oil.
The latter is good news for both the US and Russia. According to the latest Lube Report, US Base oil production staged a significant comeback last year after a massive drop in 2008-9. US Department of Energy figures showed base oil production came close to 60 million barrels in 2010 with the second half of the year marginally more productive than the first.
From the London ICIS conference last month, Lubes Report also picked up on Russian LukOil's presentation which stated that the Russian lubes producers are setting an ambitious annual target of 1.3m metric tons of Group II and III base oils from now until 2019 led by LukOil and Rosneft. The increase will be helped by a new plant in Voldograd (LukOil) and increased capacity in Samara and Angasrk (Rosneft) as well as Yaroslavl (Slavneft).