The total demand for lubricating oil in China during the 14th five year plan will enter the platform period

During the 14th Five Year Plan period, the total capacity of base oil has been saturated, the import volume of medium and low-end has further decreased, and the development of high-end capacity will be significantly improved. China's lubricating oil market will develop from quantity increase to quality upgrading and new product development. The competition will be more intense. The scientific and technological level will become the main weapon in the competition of the lubricating oil industry in the future.

1. Class III and above base oil will become the starting point

The growth space of base oil production capacity is limited, and class III base oil is the future market trend. The domestic base oil capacity has been saturated, and the capacity utilization rate has decreased from 40% in 2015 to about 29%. However, the domestic demand for class III base oil is expected to be 800000 tons, and the supply is only about 100000 tons, so there is still a large demand space. It is estimated that the capacity of class II, class III and above base oils will be more than 400000 tons / year from 2020 to 2025, mainly due to the construction and operation of coal based base oil projects such as Shenhua Group and Shanxi Lu'an.

IV. The Application of base oil is the general trend. Class IV base oil, i.e. polymer α– Olefin (PAO) base oil has special properties, which is conducive to reducing friction, prolonging oil change cycle and saving energy in lubrication system. It can be widely used in automobile, aviation, shipbuilding, industrial equipment and other fields. Automotive lubricants in developed countries have developed towards low viscosity, and the amount of Pao as an oil component with good low temperature regulation performance is increasing. At present, only Maoming Petrochemical and Shanghai NACK have an output of 20000 ~ 30000 tons in China.

2. The improvement of lubricating oil quality continues to slow down consumption

The extension of oil change cycle of vehicle lubricating oil and the slowdown of vehicle ownership will affect the traffic oil. At present, China's car ownership is 140 vehicles / 1000 people. The epidemic causes abnormal car sales in 2020. It is optimistic that the sales volume will resume positive growth in 2021 and pessimistic that it will resume in 2024. It is estimated that the sales volume will be 28.3 million in 2025, with an average annual growth of about 3% in the "14th five year plan". Taking into account the population change, the number of cars will increase from 260 million in 2020 to 330 million in 2025, with an average annual growth rate of 5% in the 14th five year plan, which is lower than the average growth rate of GDP of 5.5%. Therefore, the consumption of gasoline and engine oil is expected to be 1.53 million tons in 2025 and maintain an average annual growth rate of 1.2% from 2019 to 2025; The consumption of diesel engine oil was 1.28 million tons, with a negative growth of about 1.0%.

Intelligent manufacturing will promote the change of form quantity reduction and quality improvement of industrial oil. It is estimated that by 2025, the consumption of gear oil will be 360000 tons, with an average annual growth rate of 1.8% from 2019 to 2025; The consumption of compressor oil is 80000 tons, with an average annual growth rate of – 1.7%; The consumption of hydraulic oil is 1.16 million tons, with an average annual growth rate of – 0.9%; The consumption of pressure swing oil is 390000 tons, with an average annual growth rate of – 3%. Based on various types of lubricants, it is estimated that the industrial oil will be 2.37 million tons in 2025, with an average annual decrease of 0.8% from 2019 to 2025. The lubricating oil industry is in the period of quality upgrading.

China's lubricating oil consumption has shifted from the stage of quantitative growth to the stage of high-quality development, and is in the key period of changing the development mode and changing the growth power. The proportion of high-quality lubricating oil demand in the overall demand is increasing year by year.

3. Lead the high-end lubricant market

New energy vehicle lubricating oil has become an important field of transportation oil. The development of new energy vehicles will also be accelerated, and the consumption and product structure of vehicle lubricants will comply with the development. The driving type of new energy vehicles is the transformation from gasoline and diesel engine to electric motor. Pure electric vehicles, powered entirely by rechargeable batteries, do not need to use internal combustion engine oil, but the transmission system oil still exists, including gearbox, connector, shock absorber, cooling system and braking system, as well as gear oil and other lubricating oil. Passenger cars are initially installed with 5L left and right, and need to be replaced after 5 ~ 8 years or 100000 kilometers, so it has a great impact on vehicle use. "Oil and electricity parity" will be realized around 2025. At that time, the new energy vehicle market will be driven. It is estimated that 60000 ~ 70000 tons of special oil for electric vehicles will be required by 2025. The increment space of high-end environmental protection industrial lubricating oil is expanded.

During the 14th Five Year Plan period, the upgrading of manufacturing industry will be accelerated, and the pace of localization and substitution will be accelerated. The state continues to increase investment in high-end emerging industries such as rail transit, wind power, photovoltaic power generation, robotics and thermal energy management. In addition to the requirements of national green and environmental protection development, it will promote the sustainable development of new energy vehicles and energy-saving and environmental protection equipment. In the future, the demand for industrial lubricants will mainly come from high-end supporting oil.

4. The market demand for additives will grow strongly

It is imperative to accelerate the development of additive business. As an important part of lubricating oil business, additives have the most technical content, and are also the key to the improvement of lubricating oil quality and technological breakthrough. In 2019, China's demand for additives was 410000 tons, of which the net import was 250000 tons. Additives account for only 6.2% of lubricating oil consumption, which is still far from the level of 11% ~ 12% in developed countries. It is estimated that the demand for additives will exceed 500000 tons in 2025, accounting for about 8% of lubricating oil, but the localization of additives still has a long way to go.

5. The concentration of lubricating oil market is close to big brands

Brand concentration will continue to improve. At present, the top ten enterprises in China's lubricant market are great wall, Kunlun, shell, Mobil, BP, uni president, total, Petronas Malaysia, new Nippon Oil and Flowserve, accounting for 70% of the market share. In the future, the share of these enterprises will continue to expand. In the context of the slowdown in the growth of total consumption, technology and marketing have become important means to occupy the market, but they need large investment from large brands.

The survival of the fittest will intensify the elimination of low-end factories. Most of China's private lubricant enterprises occupy the middle and low-end market. With the accelerated pace of product upgrading and serious homogenization competition, many small and medium-sized lubricant enterprises have withdrawn from the lubricant industry, which has been reduced from more than 3000 to about 1000 at present.

6. Deep integration of lubricating oil marketing mode and Interne

Lubricating oil marketing layout and Internet Ecosystem continue to transform into service. During the "14th five year plan" period, with the large-scale application of 5g, the penetration of Internet applications in traditional industries is more comprehensive, and the competition in the lubricating oil market tends to be an online and offline integration mode. In particular, the automotive oil ecosystem will become the focus of future competition. At the same time, the lubricating service industry will become the core of future competition in the industrial oil field, and the trend of service-oriented transformation of lubricating oil enterprises will become more and more obvious, The value chain of related industries will be gradually formed and improved.

China's lubricating oil market has experienced the opportunity period of the 13th Five Year Plan period and will enter the platform period of total consumption in the 14th Five Year Plan period, but there will still be room for adjustment of consumption structure and market structure. With the upgrading of industry and the upgrading of vehicle fuel quality, it will drive the development of lubricating oil base oil to high-end direction, the adjustment and upgrading of lubricating oil products with high environmental protection and long life will be realized, and the localization process of lubricating oil additives will be accelerated.

At the same time, the gradual rise and development of the lubricating service industry will become the core of the competition in the field of industrial oil in the future. The trend of the transformation of lubricating oil enterprises to service and science and technology will become more and more obvious, and the value chain of related industries will be gradually formed and improved.