Accounting for approximately 8% of the global finished lubricant demand, Africa and the Middle East is a region ripe for growth. The region is forecast to grow at a modest compound annual growth rate (CAGR) of 3% until 2019. Infrastructure and a modernizing vehicle parc will play a role in altering the landscape for finished lubricants in the region, according to a recent blog by research and consulting firm Kline. Specifically, the countries mentioned include Nigeria, Egypt, South Africa, UAE, Saudi Arabia and Turkey.

 

 

Due to the lack of power generation, transmission and distribution system, piracy, and antiquated technology, Nigeria, one of the largest finished lubricant consumers in continental Africa, is classified as a generator-powered economy. Therefore, lubricants used in electric generators lead the demand for finished products with an estimated 39% of the total demand.  An estimated 45% of Nigerians use petrol-fueled generators ranging from 0-2 Kva due to its cheap maintenance and low fuel consumption. Middle class families and small businesses use petrol-fueled generators ranging from 0-5 Kva with a combined annual consumption of about 106.0 kilotonnes of lubricants. As a result, demand for mono-grade or motorcycle oils will see a positive correlation to the implementation of petrol-fueled generators. The total demand for finished lubricants in Nigeria is estimated at over 540 kilotonnes.

 

 

In 2014, total demand for finished lubricants in South Africa is estimated at 361 kilotonnes. Industrial lubricants constitute the largest proportion of the demand for lubricants, at 45% of the total. Demand for commercial and consumer automotive lubricants is estimated at 32% and 23%, respectively.  Demand for finished lubricants dwindled in the industrial lubricants segment from 2013 to 2014, while experiencing stagnant growth in the commercial and consumer segments. The output by South African lubricant manufacturers is rarely affected by the slowdown in domestic demand, mainly due to exports of domestically-produced goods to the rest of Africa, particularly sub-Saharan Africa. South Africa is a hub that supplies the rest of Africa. Thus, the robust growth of 4.8% in the rest of sub-Saharan Africa positively influences the demand for lubricants, particularly for the commercial and consumer automotive lubricants segments.

 

 

Egypt constitutes one of the largest lubricant markets in the African continent. ExxonMobil is the leading supplier of finished lubricants in the country, controlling over one-fourth of the market share. Domestic brands are also strong in Egypt; however, consumers are brand conscious and have gravitated towards the use of branded product from suppliers such as ExxonMobil and Shell. There is a large population of commercial automotive vehicles in Egypt; moreover, given the price sensitivity of those in the segment, conventional HDMO maintains a large portion of the market. Furthermore, pricing has caused the consumer segment to have a similar dependency on conventional oil; albeit, smaller in volume. Although both segments are expecting a CAGR between 1% and 3% in finished lubricant demand, the shift towards synthetics will be more prevalent in the consumer segment; the proliferation of synthetics will be far less apparent in the commercial space.

 

 

Given its strategic location between East and West, UAE and Dubai in particular have emerged as the strategic gateway to trade in the Middle East. The high consumption of industrial lubricants is driven by the significant marine oil volumes that are used in the UAE’s ports. Passenger car ownership is quite high in UAE. Public transportation is prevalent but use is not comparable to the scale of other country markets in the region.

 

 

Heavy duty motor oil (HDMO) in the commercial segment will reap the benefits of several governmental pushes to increase housing for the Saudi people, and various infrastructural projects, such as the Kingdom city and Kingdom tower, the King Abdulaziz International Airport, coupled with the renovations to roadways and railways, will all cause an increased demand for commercial automotive lubricants. In consumer automotives, synthetics maintain an estimated 19% of PCMO demand.

 

 

The total demand for finished lubricants in Turkey is estimated at 521 kilotonnes in 2013. Industrial oils and fluids lead the total demand, accounting for over 50% of the total volume. Demand for commercial automotive lubricants follows at over 30%.

 

Find out what else is occurring in these aforementioned markets and additional detail in the Saudi Arabia, the United Arab Emirates, and Turkey markets, by viewing the Kline blog and Kline's Africa and the Middle East regional fact sheet.