With the overall rise in lubricant prices, what direction will the lubricant industry develop in the next 5 years?

February 12, 2024

With the overall rise in lubricant prices, what direction will the lubricant industry develop in the next 5 years?

Recently, major lubricant brands have raised product prices, and the overall price rise in the lubricant industry has become a foregone conclusion. What direction will the lubricant industry be heading in the next 5 years? What factors will affect the direction of the industry? In the next five years, what will be the positive factors affecting the development of the lubricant industry?

1. Favorable policies

With the introduction of the "China Manufacturing 2025" strategic plan, China's high-end equipment manufacturing industry has ushered in new development opportunities, and the high-end equipment manufacturing industry, which is led by China's high-speed rail and China's nuclear power, has also made great strides in the national "going out" strategy. As an essential industry for the development of high-end equipment manufacturing, lubricating oil, known as "the blood flowing in the manufacturing industry", has played a huge role. The introduction of this plan has brought rare opportunities and challenges to the lubricant industry.

2. Increased market concentration

In the case of the decline in the domestic lubricant market demand, many large-scale lubricant enterprises further expand the market share, occupy the commanding heights and mainstream position of the industry, resulting in the brand concentration of the entire industry will be higher and higher. With the brand concentration of lubricant market, it brings new development opportunities for China's leading lubricant brands.

3. High demand for high-end lubricating oil

In recent years, the demand for high-quality lubricating oil in our country has increased year by year, and reached 25.9% in 2014. High-quality lubricants are gradually replacing the original low-end products and becoming the main choice for all types of end users for the following reasons:

First, the level of manufacturing equipment is rapidly improving, and a large number of precision and automation equipment needs high-quality and personalized lubricating oil products to ensure their effective operation;

Second, the level of China's lubricating oil industry has increased, and it has been able to provide all kinds of high quality, personalized and differentiated lubricating oil products for end customers;

Third, at the policy level, the state vigorously promotes the concept of "reasonable lubrication", advocating the selection of high-quality lubricating oil products to reduce various types of losses caused by improper lubrication and improve economic benefits.

So what are the obstacles that might be happening that we need to be aware of?

1, inferior oil is widespread

Because there are many lubricating oil brands on the market, the quality of lubricating oil is uneven. Due to the low production cost of fake brand lubricating oil, the price can be multiplied several times after the inferior production line is affixed with the famous brand trademark. The large space for selling fake profits makes many criminals flock to it.

2, industrial lubricants are greatly affected by economy and policy

With China's economy entering the new normal, the macroeconomic growth rate has declined, the core industry with a high degree of correlation with the lubricant industry has shrunk significantly, industrial integration and elimination of backward production capacity, and the oil change period brought about by the popularity of high-end products has a profound impact on the scale of China's lubricant market. In the lubricating oil industry, industrial lubricating oil is closely related to the heavy chemical industry such as coal, steel and cement, which is greatly affected by industry mergers and reorganizations and the elimination of backward production capacity with high energy consumption, and the demand is significantly reduced.

3. Weak bargaining power

On the one hand, the bargaining power of the lubricating oil industry to the upstream raw material industry is weak. This is mainly because the raw materials for the production of lubricating oil products are difficult to replace, and the prices of these raw materials are mainly affected by the price of crude oil. On the other hand, the bargaining power of lubricating oil enterprises to the downstream industry is not strong. The downstream industry of lubricating oil industry is automobile, metallurgy, shipping, aerospace and other industries. At present, there are many lubricating oil enterprises in our country, with a high degree of product homogenization and fierce market competition, and the prices of lubricating oil products are mainly affected by the changes of market supply and demand.

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