Lubricants

Massive boom for Egypt and Nigeria

Demand for lubricants increases in Egypt and Nigeria
lubrication.jpg

Economic growth and a rising middle income class to fuel demand for lubricants in Egypt and Nigeria, together with the establishment of local base stock plants will be crucial to support steady production levels.

The demand for lubricants in Africa stands at about 1.8 million metrictonnes, roughly 5% of total global demand. Nigeria and Egypt are two of the most lucrative markets in Africa, by size and potential revenue. The Egyptian market is ranked first, with an estimated 25% share of the African market, while the Nigerian formal market represents 10%.

Analysis of the Lubricants Market in Egypt and Nigeria, finds that the combined demand for lubricants stood at 635,000 metric tonnes for Nigeria and Egypt in 2011, and estimates this to grow moderately at a Compound Annual Growth Rate (CAGR) of 3.3% and reach 820,500 metric tonnes by 2018. The research covers automotive and industrial lubricants.

“The demand for total lubricants in both Nigeria and Egypt is set to rise on the back of increasing economic development and a rising middle income class,” noted Frost & Sullivan’s CMF Research Analyst Dr. Richard Orendo Smith. “The automotive lubricants market will remain the most lucrative segment of the total lubricants market, spurred by significant increases in vehicular uptake in both countries.”

Nigeria and Egypt are two of the most populous countries in Africa. In both countries, industrialisation drives significant annual economic growth. This, coupled with a rising middle income population, is set to sustain and further increase the demand for industrial lubricants in the medium to long-term period.

The most significant challenge likely to affect the demand for lubricants is the rising cost of fossil fuel. As the price for crude oil rises, so will the prices of raw materials, such as base oils and additives, required to formulate lubricants. In Nigeria, the thriving informal market for sub-standard lubricants represents an additional restraint to the growth of finished lubricants.

“Lubricants are made up with up to 90% base oils,” explained Smith. “However, base oils used to blend lubricants in Africa are by-products of refined crude oil. As a result, the fluctuation in global oil prices is likely to impact on the overall prices of lubricants.”

The lubricants industry is rapidly evolving with the availability of high performance raw materials supply, such as group II/ III base stock products. However, group II/ III base stock plants are lacking in Africa. The establishment of such plants will therefore, become crucial to tap into the growing lubricants market in Africa.

“Base oils manufactured in the region will undoubtedly offer lowered prices to lubricant blenders and formulators and; subsequently spur the demand for finished lubricants in Africa,” concluded Smith.

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