South Korea’s economy may be rebounding and vehicle sales within the country continuing to expand, but that will barely be enough to spur growth in the nation’s lubricant market next year thanks to the impact of electric vehicles.
That is the conclusion of the Korean Lubricating Oil Industry Association, which forecast this week that domestic lubricant demand will increase at a scant 0.5% in 2024.
“Korea’s lubricant market has been stagnant at 1 million kiloliters for the past twenty years,” the association wrote in a report published Wednesday. “Although the number of car registrations will continue to increase, it will be difficult to expect an increase in the consumption of lubricants as the proportion of eco-friendly cars increases.”
The association, which is located in Seoul, predicted that the country will consume 1.095 million kL of finished lubes next year, compared to 1.027 million kL this year.
The group expects demand for cutting oils, electrical insulating oils, process oils and a collection of small-volume lubricant categories to grow at healthy clips but that consumption of most other categories will decrease. Automobile lubricant demand, it predicted, will fall 1.5% to 340,000 kL.
As in many countries with developed economies, lubricant demand in South Korea tends to track a few percentage points behind economic growth because lubricant demand continually rises, resulting in longer drain intervals. The lubricant association said the gap with economic growth rates is increasing as car sales shift toward EVs. Vehicles running solely on battery power do not use engine oil, the industry’s largest product category by volume.
In its analysis of prospects for next year, the association noted that the global economy is in growth mode as it recovers from the COVID-19 pandemic. The rebound has been hampered, though, by the slump in China, a slowdown in manufacturing and now war in Europe and the Middle East. The International Monetary Fund forecasts global growth of 3% next year and that the South Korean economy will grow 1.4%.
The association believes that will not be enough to lift domestic lubricant demand above the plateau it has been at for years. It predicted consumption of marine lubricants will fall 1.7% to 96,728 kL, that hydraulic fluids will be set back 1.8% to 115,542 kL, that cutting oil consumption will swell 1.2% to 63,933 kL, that demand for insulating oils will rise 4% to 19,970 kL, that grease demand will slip 2.2% to 15,646 kL, and that rolling oil demand will fall 2.4% to 21,281 kL.