Brazil’s accelerating economy drives demand for automotive lubricants
An accelerating economy has doubled the passenger car fleet in Brazil to about 30 million vehicles since 2000. The new car fleet has also driven significant demand increases for lubricants in this country. These trends have combined to propel Brazil to the sixth-largest lubricants market globally, after China, the US, India, Japan and Russia, but ahead of Germany.
From 2004 to 2012, Brazils consumption of finished lubricants grew by 33% to reach 1.23 million metric tons (metric MMt) of products in 2012, according to the new IHS chemical special market research report. The total 2012 global market for lubricants was approximately 39 metric MMt.
According to IHS, nearly 70% of all lubricants used in Brazil are for automotive applications such as motor oils; diesel, gasoline and flex fuels; greases; powertrain fluids for transmissions and axles; and motorcycle fluids. Other uses include industrial lubricants for process, marine and specialty applications (aerospace, electronics, fine mechanics, vacuum technologies and high-temperature). Globally, automotive applications account for 56% of lubricants used.
Brazils increase in demand for lubricants is a direct reflection of its economic growth, said Dr. Stefan Mueller, author of the study and a specialty chemical analyst at IHS. The countrys GDP tripled during 2004 to 2011, and, with that impressive growth, the disposable income of the population grew rapidly, allowing many families to buy their first car. This rise in economic activity propelled the lubricants market to new heights in Brazil, since automotive applications constitute a majority of lubricant uses in the country.
Likewise, there is ample room for growth in automotive demand in Brazil, which will continue to expand the need for lubricants. The Brazilian automotive market continues to be driven by formal employment creation, improved financing rates that are at an all-time low, and a low unemployment rate, said Guido Vildozo, Brazilian automotive analyst for IHS Automotive. This powerful combination, which enables consumers access to credit, will continue to drive Brazilian automotive demand for years to come.
Brazil also has a low motorization rate of five people per car, thus allowing ample market growth. IHS expects the Brazilian auto market to be close to 5 million units before the end of this decade. Forecast that the motorization rate will approach 3.3 people per car during the next 10 years. Brazil has become such a critical pillar of growth for original equipment manufacturers worldwide, and the same can be said for producers of lubricants that supply the automotive sector.
While the Brazilian lubricant industry has changed significantly for the better quality and quantity of its products, the industry still faces some significant technological and regulatory challenges that it must addressed, says Mueller. From a quality perspective, the lubricants market will change greatly before 2020. New regulations are coming that demand less air pollution as well a decrease in fuel consumption for motor vehicles. These goals can be achieved only by introducing products based on higher-quality base oils, and new additive chemistry that has already been developed in North America and Europe.
The challenge, Mueller added, will be for Brazilian market participants to decide whether to upgrade technology and invest in the required production plants or to import those products over time. With the trade balance for chemicals in an increasing deficit, he expects the government will likely offer incentives to install the required plants and to encourage refiners to increase collection and re-refinement of used oils to help decrease the requirement for base oil imports.
From the Archive