China, India vehicle ownership to drive base oils market - Shell

08 June 2010 08:26  [Source: ICIS news]

SEOUL (ICIS news)--Massive growth in vehicle ownership in China will support demand for base oils over the next few years, Tim Ford, vice president for Shell Lubricants Asia-Pacific said on Tuesday.

Despite a number of uncertainties in the market, such as the volatility of prices and the recovery of developed markets in Europe and North America, a 5–10% growth in the lubricants business in China and India could be expected, he added.

Furthermore, the demand for high-quality base oils in Asia would rise and the gap in quality between western markets and Asia was set to close, he said.

Ford was speaking at the 4th ICIS Asian Base Oils & Lubricants Conference held in Seoul, South Korea, from 8-9 June.

“The IMF forecasts a GDP growth of 7% across the region,” said Ford, adding that while vehicle ownership in China was growing rapidly only 3% of the Chinese population currently owned a car.

“In 2017, China will overtake the US in terms of car ownership,” he said, adding that growth in China would be further stimulated by its massive road building programme.

China was set to complete nearly 65,000 km (40,389.13 miles) of roads by the end of 2010, and India had awarded tenders for construction of nearly 25,000 km of roads, according to Ford.

Road-building programmes would stimulate lubricant demand firstly through the large amount of construction-related lubricant consumption, and secondly, by demand from vehicles on the roads, he added.

On a separate note, Ford said that advanced technology was required in the car industry, due largely to the increasing focus on reducing emissions and increasing fuel efficiency.

It was no longer true that there was less environmental pressure in Asia, he said.

However, Ford added that many companies in Asia were developing products for the mass market, which were earlier only available to premium markets.

Base oils are used in the formulation of lubricants across a broad spectrum of applications, from automotive engine oils to industrial and process oils.

High-quality base oils refer to group II / II+ / III base oils, versus the traditional group I base oils.

The demand for group III is estimated to be 6% of Asia’s total demand for base oils, which currently stands at 11.9m tonnes annually, according to Peter Kim of SK Lubricants, who was speaking at a presentation during the conference.

With additional reporting by Anu Agarwal

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By: Shelley Kerr
+44 20 8652 3214

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