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November 29, 2016

Volume 7 Issue 8

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Korea’s Lube Market Set for a Stagnant ‘17

South Korea’s lubricant consumption increased marginally in 2016 but is not likely to show any growth in 2017, the Korea Lubricating Oil Industry Association said in its annual report last week.

The association, which represents lubricant suppliers in the country, forecast lubricants demand to shrink by .3 percent in 2017 to around 1 million kiloliters, or 935,616 metric tons, citing increasing political and economic uncertainties at home and abroad. Political unrest in South Korea due to corruption allegations against President Park Geun-hye and stagnant demand for exports and domestic consumption make for a bleak outlook, the association explained.

The Seoul-based group predicts demand for automotive lubricants will fall .8 percent to 322,707 tons and that demand for industrial lubricants will grow .4 percent to 185,988 tons in 2017. It expects demand for metalworking fluids and rust preventives to increase 3.1 percent to 124,825 tons; marine oils to fall 1 percent to 93,507 tons; grease to fall .3 percent to 16,548 tons, and electrical insulating fluids to decrease by 3.4 percent to 16,255 tons.

The association estimates that lubricants consumption for the full year of 2016 is on track to reach 938,309 tons, a 1.5 percent increase over 2015. This is due in large part to a temporary tax cut on automobiles which boosted vehicle sales as well as demand for industrial lubricants and metalworking fluids used in vehicle manufacturing.

Demand for industrial lubricants is predicted to increase 6.9 percent this year, to 185,160 tons. Consumption of metalworking fluids and rust preventives is forecast to grow 4.3 percent over last year to 121,126 tons. The association’s 2015 annual report predicted a 1.1 percent growth increase this year.

Concerning automotive lubricants, the report noted that “Growth has limitations due to the downward trend in average travel distance and extended engine oil change interval.” Average daily distance traveled per unit had decreased to 39.8 kilometers (24.7 miles) in 2015 from 54.8 km (34 mi) in 2007. Average yearly consumption of car lubricants per unit had fallen to 17.3 liters in 2015 from 21.4 liters in 2007. Automotive lubricants account for more than a third of total lubricants consumption in the country.

The association composes its annual lubricant market reports using published statistics on factors such as the country’s economic growth rate, manufacturing operations, imports and exports, shipbuilding industry performances, marine freight traffic, automobile registration rates, electrical power demand and others. The International Monetary Fund forecasts that South Korea’s economy will grow at a rate of 3 percent in 2017.