Lubricating oil additives billions of market, the process of localization accelerated, opportunities and challenges coexist

January 05, 2024

Lubricating oil additives billions of market, the process of localization accelerated, opportunities and challenges coexist

Main body

The global Lubricant Additive market is mature, the overall scale reaches 100 billion, and the market demand growth is stable in China. Lubricating oil additives serve the lubricating oil market, generally accounting for about 2% to 30% of the total lubricating oil. According to transparency's report, the global lubricant additives market size reached $16.9 billion in 2021, and is expected to grow at a compound rate of 2.8% in 2022-2031, reaching $22.7 billion by the end of 2031. As one of the major consumers of lubricating oil additives in the world, the apparent demand for lubricating oil additives in China in 2021 reached 950,100 tons, and the compound growth rate from 2013 to 2021 was 2.99%.

High competition barriers overseas high monopoly

The four largest international additive companies - Lubrizol, Infineum, Chevron Oronite and Afton - account for about 85% of the global market. In addition, Chemtura, BASF, Rohmax and other companies occupy part of the market share with special products. The four giants have been involved in the field of lubricating oil additives earlier, and have strong advantages in product series, scale, brand effect, research and development and patents.

The lubricating Oil Additive products in our country are mainly single agent, and the high-end compound agent is less. China's lubricating oil additive production enterprises are mainly divided into three categories:

1) Foreign-funded factories in China, about 228,000 tons/year in production and 150,000 tons/year under construction;

2) petrochina, a state-owned enterprise, has two production bases in Lanzhou and Jinzhou, with an annual capacity of about 94,000 tons; Shanghai Hailun, a joint venture between Sinopec and Runying, has an annual capacity of about 40,000 tons;

3) Private enterprises, led by Ruifeng New Materials and Lianlong, with a total annual capacity of 340,700 tons. Among them, most of the foreign capital is the compound production capacity, while the domestic single agent is mostly, high-end products still need to rely on imports, and the import volume in recent years is about 300,000 tons.

The new track presents both opportunities and challenges

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Looking ahead to 2024, the new track presents both opportunities and challenges. In the field of new energy materials, many excellent enterprises continue to improve their market share in the field of domestic replacement of more urgent lubricant additives, opening the journey of 1 to N.

The ecological chain of domestic brands has gradually improved, and the policy end, the supply end, and the technical end have exerted their efforts. We believe that the way to break through the domestic industry lies in the construction and improvement of the entire ecological industry chain, and the formation of an industrial division of labor cooperation mechanism for the development and production of oil additive formulations, oil companies for oil product allocation and terminal applications.

1) Advantage of raw material supply guarantee, acceleration of domestic supply of key raw materials. Raw material costs in the production cost of lubricating oil additives accounted for about 90%, China's refining capacity continues to rise, most basic chemical raw materials can fully meet the needs of domestic production; In addition, there are also major technological and productivity breakthroughs in the production of key raw materials such as linear alpha-olefin for high-end preparations.

2) Technical certification breakthrough, enterprises go abroad. Capital and technical barriers to API certification is difficult, domestic enterprises to increase independent research and development, at present, China's state-owned enterprise compound products have passed the API test, private enterprise leading certification progress smoothly. In addition, China is expected to take the good opportunity of the "Belt and Road" and friendly relations between China and Arab States, increase the output capacity of large-scale construction machinery and transportation equipment, and further develop emerging markets such as ASEAN and the Middle East.

3) Domestic policy guidance and industrial upgrading promotion. Since the establishment of the engine Oil Chinese Standard Development Innovation Alliance in 2016, in 2023, China's first self-developed national standard for diesel engine oil specifications has passed the standard review, which is expected to gradually change the status quo of China's engine oil completely adopting foreign standards. Environmental protection and emission reduction policies are promoted, and the localization of the new energy industrial system is superimposed, and China's oil products enterprises are expected to achieve "curve overtaking".

Lubricating oil additives, as the "chip" of lubricating oil, determine the performance of lubricating oil products, and its market is mature and has been monopolized overseas for a long time, and the market share of domestic brands is less than 5%. In recent years, the importance of energy chain safety has become increasingly prominent, and relevant enterprises in China have successively made domestic breakthroughs in lubricating oil and additive products. It is the key to improve the construction of the entire oil ecological industry chain.

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