Malaysia, Thailand Drink Up Synthetics

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Demand for synthetic lubes is growing in Malaysia and Thailand due to the rising popularity, and evolving lubrications needs of Japanese vehicles and equipment, industry experts said at an industry conference last month.

The rapidly changing needs of original equipment manufacturers increased the penetration and higher adoption of synthetic lubes, Petronas Lubricants International Head of Technology for Asia Ravi Tallamraju said of the Malaysian market during a May 17 seminar preceding the ICIS Asian Base Oils & Lubricants Conference in Singapore. The heavy influence of Japanese OEMs use of SAE 5W-30 and 0W-20 brought about an increased demand for lighter viscosity lubes and synthetic lubes.

About 40 percent of passenger car lubricants in Malaysia are semi-synthetic or synthetic, with Petronas, Shell and BPs Castrol having more than 70 percent of the domestic lubricant market.

Synthetic lubricants appear likely to continue playing a major role in Malaysias passenger car motor oil market. According to Tallamraju, Malaysia has the largest passenger car population in Southeast Asia, with about 11.2 million units in 2014, mainly made up of domestic brands, Perodua and Proton and Japanese makes like Honda, Toyota and Nissan.

Almost the same number of cars as motorcycles are on the road, and they are dominated by national OEMs, but Japanese OEMs are increasing market share and influencing the market, he said.

Malaysia may be one of the more mature markets in the region but is not without scope for growth, he added. Petronas forecasts that the countrys lubricant demand will grow at annual rates above 2 percent in coming years. Passenger car motor oil accounts for about 68 percent of overall demand.

For Thailand, the government aims to increase the number of eco-cars to help with environmental protection, said Buranin Rattanasombat, executive vice president of PTT Public Co.s lubricants business.

In 2013, Thailands Board of Investment offered tax incentives to attract foreign eco-car manufacturers to set upfactories and attracted investments from large Japanese OEMs like Mazda, Nissan, Mitsubishi and others. This year the government introduced tax incentives for purchases of cars complying with emission standards and fuel efficiency, driving the demand for synthetic lubricants in Thailand.

Synthetic lubricants with lower viscosity are needed to satisfy these demands in addition to speed and fuel efficiency with low carbon dioxide emission, Rattanasombat said during the seminar.

With new polices and tax incentives, there is likely to be a high growth in eco-car market with a focus on fuel efficient, there will be more demand in high-end lubricants, he said.

Rattanasombat added that many consumers do not know about the benefits of synthetic lubes, only that they can be costly. This creates a challenge, he said, because as vehicles manufactured to Euro V emissions standards become more common in Thailand, lubricants marketers will have to educate the customers to realize the limitation and engine oil selection.

According to an analysis by PTT, Thailand consumes 700 million liters per year of lubricants, with PTT, Shell, ExxonMobil and Chevron supplying 53 percent of that volume. The rest of the market is divided between some 120 companies.

In January, as part of the countrys eco-car project, the excise tax on gasoline and diesel eco-cars with engine capacity of more than 1,300 cubic centimeters was reduced from 17 percent to 14 percent. In November 2014, Mazda started production of its eco-car, Mazda2 in a factory that cost over U.S. $500 million. It has capacity to make 158,000 units per year.

Petronas Melaka, Malaysia, refinery is the countrys first and only base oil plant producing API Group II and III base oils, and it has capacity of 300,000 metric tons per year. PTT is Thailands national oil company and a producer of API Group I base oils.

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