Global lube demand remains flat, but energy demand will skyrocket.

While global lubes demand remains relatively flat, the demand for energy is set to skyrocket over the next three decades.

Map of world with oil barrelsAccording to a key industry analyst, China and India are shifting the balance in the lubricants market towards the East while, perhaps unsurprisingly, the demand for performance lubricants has also increased significantly.

In an analysis of the global lubes market by K&E Petroleum Consulting's President H. Ernest Henderson, reported by Lubes'N'Greases' George Gill, he noted that whilst overall demand across the world over the past 25 years has remained relatively flat, the geography of the market has changed dramatically.

Breaking the majority markets (around 90% of total demand) into thirds - AsiaPac, North America and Europe - Henderson noted that in 2004 they held more or less equal shares of one third of the 38m metric ton market.  By 2018, AsiaPac held some 44% of demand for a total lubricants market that has only risen by one million tons over the past 15 years to 39m. 

However, while the lubricants market shows a relative flatline, a new report from the US Energy Information Administration (EIA) is projecting a 50% growth in energy demand to 2050.  The majority of this growth is set to come from Asia and other areas of strong economic growth.  Tramsport energy consumption alone is set to increase by almost 40%, with the industral sector taking the largest global energy share.  If the predictions are correct, electricity generation will rise by a massive 79%, with renewables set to record 3.1% annual growth against just 1.1% for natural gas, 0.6% for petroleum and other liquids and 0.4% for coal.

Commenting on the lube industry's relatively flat demand, Henderson suggested that despite continued population, vehicle and economic growth across many countries (China and India in particular), greater efficiency in the use of higher-quality lubricants has allowed longer operating periods for lower lubricant volumes.

He also highlighted the challenges faced by lubes producers in creating product that meets OEM demands which are, in turn, driven by government, industry and public legislation and sentiment towards more environmentally efficient products.  This has been particularly evident in Europe and North America, according to the Lubes'N'Greases report. 

Meanwhile, the remaining key markets - Latin and South America and the Middle East are moving towards higher-performance, Group II and above base oil products.  Here, the challenge faced is the ability to produce enough of this quality of base oils to meet demand.  Here Henderson noted that regional and global exchange of these products - in terms of both quantity and quality - has increased signficantly.