15 August 2013 20:59 [Source: ICIS news]
By Judith Taylor
According to one US-based grease seller, opportunities in
The opportunities are lodged mainly in the economic growth the country experienced during this approximate five-to-eight year period.
Sources pointed to
The economic changes and recognitions have fostered opportunity, and that has drawn US grease makers, lubricant producers and base oil suppliers toward closer engagement with the South American country.
But the challenges are significant.
“The business mode in
To the potential supplier, this typically means dedicating time and resources for South America mainly to
“If you look at it,
“But the OEMs [original equipment manufacturers] are in the south because this gives access to Mercosur players,” the source added.
OEMs are key buyers for greases and finished lubricants used in motor vehicles of all kinds and numerous other end-use sectors ranging from marine greases to elevator lubricants.
Mercosur is a free-trade group whose full members are
While OEMs are keen to be in the south in order to access the free-trade market options, US grease suppliers trying to operate in Brazil must deal with the logistics of getting material to those OEMs. The logistics of doing that can be costly, sometimes outweighing the attraction of gaining traction in the Brazilian market.
There are several qualifiers in looking at the logistics.
US grease market sources said originally the differences between the
But customers often prefer original formulations, making substitutions of one oil or one additive for a different one either not advisable or not doable.
If the grease is produced in the US, keeping formulations consistent and minimising oil choices, then the supplier must deal with the overall cost of logistics to move the finished goods to Brazilian OEMs.
“Logistics from North America to
According to sources, the mark-up can be anywhere from 30-80%, including the taxation and cost of logistics in moving the material.
“You cannot do everything from
In order to meet
Since greases use base oils, and some other oils, as feedstock, fundamentally being composed of natural or synthetic oils combined with thickening compounds that yield a solid or semi-solid product, looking at the base oil production of the region can be helpful.
US grease sources said there were some indications in the market that Petrobras would build a grease unit in 2015, but no confirmed positions on a project were detected.
So the opportunities for
Tackling the challenges of logistics is the sticking point.
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