Lubricant consumption worldwide dropped by 30-50% in March-April 2020 but returned to previous levels in the second half of the year, according to Konstantin Melnichuk from a consulting and research enterprise Kline & Company.
The pandemic has severely impacted demand for lubricants in 2020 and worsened prospects for growth, Mr. Melnichuk said at CIS Base Oils & Lubricants conference in Moscow on 19-20 May 2021. DYM Resources attended the conference and participated in the discussion afterwards.
The drop in demand affected different sectors of the market. Oil refining was one of those that got hit hard by the decline in demand for fuel materials and the disappearance of the jet fuel market.
In 2020 the consumption of petroleum products was 5 to 20% less than in 2019. As a result, capacity utilization and refineries operating margins declined significantly. Because of this the volumes of raw materials are still limited which causes deficit and price increase at base oils market.
There are still some open questions about the market future. It’s not clear, for example, how the long-term impact of COVID-19 on the lubricants consumption is going to look like. A possible scenario is that the levels of oil consumption are going to decrease, and some refineries will be shut down. This puts Group I oil plants at risk because they depend on refineries.
The demand for base oils made of regenerated oils is increasing since they are not connected to the refineries and are not going to be affected by possible shutdowns. To sum up, the market is very dynamic at the moment and requires thorough analysis.
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