Lubricant Additives Market - Growth, Trends, COVID-19 Impact, and Forecast (2021 - 2026)

Asia-Pacific Region Poised to Lead the Market

In Asia-Pacific, China is the largest economy in terms of GDP. The country witnessed about 6.1% growth in its GDP in 2019, even after the trade disturbance caused due to its trade war with the United States. The economic growth rate of China in 2020 was initially expected to be moderate compared to the previous year. Although China was the first country affected by COVID-19 and its related lockdown, it was also the first to come out of lockdown. However, the country has been witnessing recurring cases of COVID-19, leading to further lockdowns. Thus, manufacturing was heavily impacted, which continued with the slow growth during 2020. According to the IMF, in 2020, the GDP of China declined by 1.9%. However, the GDP is expected to reach 8.2% in 2021.

The food processing industry is moving toward maturity in the country, witnessing moderate growth. Processed and packaged frozen foods are increasingly becoming popular, especially dairy, baby food, and confectionery products, driving the food processing industry. In the beverage industry, the trend of consuming healthy, natural, and convenient ready-to-drink smoothies, juices, and yogurts is emerging. Processed fruits, pork, dairy, and specialty grains and legumes are some of the food products driving the food processing industry growth in the country. Thus, the food and beverage industry has been offering opportunities for investment, which is expected to create demand for new equipment used in such plants, offering opportunities for the market. For instance, in May 2020, Nestle decided to make a series of investments to strengthen its footprints and enhance its product portfolio in the country. Nestle plans to invest about USD 103.4 million in capacity expansion of its existing pet food plant in Tianjin and its first production facility in Asia for plant-based products.

China is promoting and undergoing continuous urbanization, with a target rate of 60% for 2020. The increased living spaces required in the urban areas, resulting from urbanization and the desire of middle-class urban residents to improve their living conditions, may have a profound effect on the housing market, increasing the usage of lubricants additives in construction applications. According to the National Development and Reform Commission, the Chinese government approved 26 infrastructure projects at an estimated investment of about USD 142 billion in 2019 that are estimated to be completed by 2023. The growing demand for housing is likely to drive residential construction in the country in the public and private sectors. The new hotel projects in the country increased by about 15% in 2019. The increase in the construction of tall buildings and hotels is driving the market studied. With the growth of the construction sector in China, the demand for lubricants used for heavy equipment in the construction sector (such as penetrating and coating wire rope lubricants, diesel fuel, engine oil, and bearing grease) is expected to increase over the forecast period.

The Chinese automotive manufacturing industry is the largest globally, with a production share of just over 28% in 2019. The industry witnessed a slowdown in 2018, and production and sales declined. A similar trend continued in 2019, and the production declined to 25.7 million vehicles, by about 7.5% Y-o-Y. According to the China Association of Automobile Manufacturers (CAAM), automotive production is expected to decline by about 2% in 2020. However, due to the COVID-19 pandemic and the implementation of lockdown, the automotive manufacturing units were shut down in Q1 2020. However, the number of passenger cars produced in November 2020 was about 2.33 million, registering a staggering 11.8% M-o-M growth, while 518 thousand commercial vehicles were produced in November, with a 10.6% M-o-M growth. The number of passenger cars produced from January to November 2020 was down by 8.1% Y-o-Y compared to the same period in 2019, while commercial vehicle production increased by 22.2%. The uncertainties in the automobile industry are expected to impact the market studied.

Furthermore, the country’s appetite for aviation seems set to grow exponentially. The high demand for aviation has led to the government's decision to introduce an airport building program, which includes huge investment in terminals, runways, and aircraft. For instance, the total civil aircraft fleet in the country increased steadily over the past five years. Chinese airline companies plan to purchase about 7,690 new aircraft over the next 20 years, which may be valued at approximately USD 1.2 trillion. Furthermore, under the plan, ‘Made in China 2025’, China may supply over 10% of the homemade commercial aircraft to the domestic market by 2025, increasing the demand for lubricant additives over the forecast period. Overall, the market for lubricant additives is projected to witness healthy growth over the forecast period, though the market remains affected in 2020 due to the COVID-19 outbreak.

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