China’s lubricant industry stands to benefit from the government’s economic stimulus pledges aimed at stemming the current economic instability, says an industry information provider.
After a sustained period of strong growth since the late 1980s, China’s economy has faltered and the government is struggling to reach its 5% growth target. It relies on industrial production and manufacturing exports, as well also construction, which boomed and bust, leaving ghost towns of empty tower blocks.
The China Lubricant Information Network, Sinolub, an industry information analysis and news provider, thinks recovery of infrastructure projects, real estate and manufacturing will further push demand for industrial lubricants.
With the improvement of the capital market and the guidance of medium and long-term capital, investment in manufacturing will gradually increase. The role of lubricating oil in the operation of machinery and equipment cannot be ignored, especially in automobiles, heavy machinery and other industries.
Lastly, a general improvement in the country’s economic performance would raise per capita spending, therefore increasing demand for consumer goods and again pushing up demand for industrial lubricants.
Sinolub cautions that this growth might be tempered by several factors. Increased automotive emissions restrictions and the electrification of the passenger car fleet could be a challenge to automotive lubricant suppliers. It recommends the response needs to be innovation.
“The tightening of environmental protection policies requires lubricating oil enterprises to continuously upgrade their products to meet higher environmental protection standards. Although this will promote product innovation, it will also increase the research and development cost of enterprises,” Sinolub wrote.
Also, the fluctuation of raw material prices globally will have an impact on lubricant manufacturing costs. Leading enterprises need “to actively seek effective raw material procurement strategies to reduce the cost pressure.”