South Koreas demand for lubricants is expected to remain around the level reported this year, which exceeded prior expectations, according to the Korea Lubricating Oil Industries Association.
The association, which represents domestic lubricants suppliers and collects waste oil and packaging materials for recycling, estimated in its annual report last week that the countrys lubricants consumption is on track to reach 971,641 metric tons by the end of 2017, which is a 2.5 percent increase over 2016.
Despite the political unrest around the presidential impeachment and international tensions with China over deployment of a [Terminal High Altitude Area Defense (THAAD) system], the demand for lubricants didnt reduce actually, said the report, which was compiled with sales data from the first three quarters and an estimate of fourth quarter results.
The report said consumption of automotive lubricants increased 1 percent to 332,325 tons; industrial lubricants were up 2.5 percent to 192,567 tons; metalworking fluids and rust preventives grew 3.9 percent to 128,092 tons; and marine oils increased 10.3 percent to 104,692 tons.
This year, lubricants companies had difficulties in their business because of the THAAD issue with China, association executive Lim Jongchan told Lube Report Asia. South Koreas move to deploy a THAAD system in South Korea hurt trade between Korea and Beijing, which has viewed the deployment as a threat to its own interests.
But production of automobiles increased 4.4 percent from January to September, which seems to contribute to the growth of lubricants consumption, Lim added.
As for 2018, the association forecasts that overall lubricants demand will increase 1.4 percent to 985,082 tons, citing a 3 percent economic growth rate predicted for South Korea by the International Monetary Fund and signs that the global economy is recovering despite possible security threats from North Korea.
The Seoul-based group predicts that demand for automotive lubricants will go up 1.8 percent to 338,253 tons and that demand for industrial lubricants will grow less than 1 percent to 193,891 tons. It expects demand for metalworking fluids and rust preventives to fall by around 0.6 percent to 127,352 tons; marine oils to grow 4.2 percent to 109,037 tons; grease to expand by 1.4 percent to 18,570 tons; and electrical insulating fluids to grow by 9.1 percent to 21,650 tons in lines with growing electricity consumption.
The countrys lubricants consumption has stagnated at around the 898,200 tons per year level for the past 20 years, since the Asian financial crisis, the report noted. Its hard to expect growth in the years to come, either.