May 28, 2019
Volume 3 Issue 3
Russian Lube Demand on Downward Path
MOSCOW – Russian finished lubricants demand was sluggish over the past few years because of an economic recession in the country, and consumption has not returned to 2014 levels yet, a consultancy found.
During the same period of time, combined production of finished lubes and base oils experienced modest growth, while exports and imports fell.
Russia consumed 1.6 million tons of finished lubricants in 2018, or 2 percent less compared to 2014, when it consumed 1.63 million tons, B2X Consulting, a Moscow-based firm, told GBC’s CIS Base Oils and Lubricants conference held here last week.
“Industrial lubricants recovered after the fall in demand in 2015 and returned to the same level as in 2014, while passenger car and heavy-duty engine oils declined. The consumer segment has been declining due to weakening consumer demand and a decrease in unit consumption,” Olga Poltavskaya, managing partner in B2X, told the conference.
On the other hand, Russia’s production of finished lubricants and base oils grew from 2.43 million tons in 2014 to 2.5 million tons last year, she said.
B2X said the modest production growth is thanks to the government-sponsored import substitution program introduced almost a decade ago, under which domestic companies and individuals are encouraged to replace imported products with Russian alternatives.
The consultancy found that exports and imports of lubricants and base oils have declined over the past four years. Export volumes declined 3 percent to 1.2 million tons in 2018. “Recovery of domestic demand and shutdown of Lukoil’s Nizhniy Novgorod base oil production affected the exports negatively,” Poltavskaya said.
Russia imported a far smaller volume last year than in 2014, the consultancy found. The country imported 431,000 tons of lubricants in 2014, slumping to 303,000 tons in 2018.
“Imports of finished lubricants have decreased much more – by 30 percent, since 2014," Poltavskaya said. “It is due to a sharp imports drop in 2015, followed by stabilization to the current level in 2015,” Poltavskaya said.
B2X expects the Russian automotive lubricants demand to decrease in the long run, with only industrial oils’ share of overall demand projected to grow. It also expects original equipment manufacturers’ labels on finished products to change the competitive landscape in the country’s finished lubricant market.
“In addition, lubricant imports are [expected] to continue to decrease by 1 to 2 percentage points annually, with more players coming in to localize production. Synthetics and specialty product markets are becoming highly competitive in Russia,” she concluded.