Market demand changes are the internal driving force of the lubricants market

Lubricating oil : the indicator of economic development
According to the UN benchmark data, the global economic recession in 2009 was 2.2%. In the same period, global lubricant demand suffered a heavy blow, falling 12-13%. The Chinese landscape is a good one. In 2009, China's economic growth rate reached 8.7%, and the consumption of industrial lubricants increased by 4.2% compared with 2008.

Changes in the lubricants industry have become a benchmark for the global economy. Analysts believe that: "Lubricating oil products have the dual characteristics of industrial products and consumer goods, the rise and fall of this particular industry and the rise and fall of all walks of life echoes, is an insight into the development trend of the dialysis economy, the level of lubricant production and sales data directly involved Warm and cold nerves to economic development."

Affected by the economic crisis, the global economic development has stagnated and stagnated. Many factories have had to cut production or even stop production. This has caused the lube market to remain in recession for three consecutive years. According to a report released by Kline, the demand for metalworking fluids was severely affected by the declining demand in the global automotive industry, metal processing industry and machinery manufacturing industry. From 2007 to 2009, metalworking fluids and heavy-duty engine oils The demand has fallen the most. At the same time, due to the downturn in the tire industry, the demand for process oil has also dropped significantly.

Looking back at China, before the first half of 2008, under the trend of rapid national economic development, the lube oil market has maintained a trend of rapid growth. However, starting from the second half of 2008, due to the impact of domestic economic fluctuations, market demand has dropped significantly. In 2009, under the stimulus of China’s economic recovery policy, with the steady recovery of China’s steel, automobile and machinery industries, the demand for lubricants increased by 5.4%. In the first quarter of this year, the momentum of China's economy and even the global economy has become more pronounced, which has directly contributed to the strong performance of China's lubricants market in the first quarter. According to relevant statistics, the country’s lubricant production in the first quarter increased by 30% year-on-year. Sales figures of Chinese and foreign lubricants companies including Shell and Great Wall also confirmed this growth trend. Among them, Great Wall Lubricants' product sales volume in the first quarter increased by 43% year-on-year, and sales of high-end products increased by 50% year-on-year, exceeding overall growth. Level.

According to data released by the National Bureau of Statistics, in 2009, the apparent consumption of China's lubricants market was 9.4 million tons, an increase of 14.6% over the same period of last year. Many industry experts and lubricant manufacturers believe that the actual consumption of lubricants in China in 2009 was only 5.8 million tons. The reason is that the apparent consumption is equal to the production volume plus the import volume, minus the export volume, which leads to a double counting between the production and sales volume of various lubricant manufacturers, resulting in apparent consumption data exceeding the actual consumption. This result not only makes the actual market share of lubricant brands become confusing, but also obscures the value of lubricants for economic development.

2:8 to 4:6 Evolution and Wrestling of Dynamic Markets

In 2000, the proportion of high-grade oil in the domestic lubricants market was less than 20%. According to Xu Jian, director of Great Wall Lubricant Marketing, the proportion of high-grade oil in China's lubricants market has reached 35% in 2009.

Song Yunchang, general manager of Sinopec Lubricants Co., Ltd., said: “The lustration of lube products is an industry trend. In the high-end oil market, self-owned brands tend to be homogenous compared to international brands, but brand influence needs to be enhanced.” According to market survey data, with the increase in the brand image of China's lubricants, the ratio of self-owned brands and international brands in the high-end market has changed from the past 2:8 to the present 4:6. According to relevant person in charge of the Great Wall Lubricants, the growth rate of the high-end products of the Great Wall in recent years has exceeded the growth rate of its overall sales.

This is the result of the dynamic market evolution, especially the upgrading of industrial production demand and the rise of the automotive aftermarket, which has become the main driving force for the change of the lube industrial structure. At the same time, the rise of the brand image of China's lubricating oil represented by the Great Wall has prompted it to become a powerful sharer of the most valuable high-end market.

At present, China has embarked on the development path of a new type of industrialization, and the large-scale and refined equipment used by domestic industrial enterprises has become a trend. Enterprises pay more attention to cost control, pay attention to the high efficiency and long life of equipment operation, and put forward the demand for high performance and long oil change intervals of lubricants, so the dominance of lubricants has gradually increased.

In the automotive oil market, due to the impact of low-carbon energy conservation and environmental protection, higher requirements are placed on the quality of lubricants. This is mainly reflected in the environmental protection, energy saving and extended oil mileage of lubricants. In July 2008, some major cities in China began to implement the "National IV" emission standards, which will be fully implemented by 2011. At present, diesel engine oil CF-4 grade, gasoline engine oil SJ grade products have become popular products, direct replacement of low-end products, and CH-4 and above, SL and above grade products market will also rapidly expand.

According to relevant sources of Shanghai GM Wuling, the new models produced by the company have all replaced SJ lubricants with SM grades, and have been upgraded to meet more stringent environmental protection and energy conservation requirements and industry development trends. Mercedes-Benz, Toyota, General Motors and other brands of high-end models have entered the era of filling and service station oil selection of synthetic oil products.

Behind the industrial upgrading, there are numerous lubricating oil manufacturers scrambling to fight and wrestle. The high-end lubricants market can best embody the competitiveness of a single manufacturer, and nobody will give up. Moreover, the overall upgrading of lubricants will lead to longer oil change cycles. This will undoubtedly slow down lubricants to some extent. Market development. Therefore, the expansion of the high-end market, while providing unlimited business opportunities for manufacturers, also exacerbated the fierce and cruel nature of market competition. It is difficult to predict who will win in the changes in the market.

Song Yunchang, general manager of Sinopec Lubricants Co., Ltd., believes that: “Lubricants are different from common industrial products and are a fast-moving dynamic market. Whoever can grasp the latest technology trends and trends in time will be able to grasp this market initiative. Become a leader in the market.” This is not only about grasping opportunities, but also testing the company's insights, the overall situation and resilience.

It is based on this understanding that in 2009 Sinopec launched the "source plan" for automobiles, and Great Wall Lubricants took the lead in establishing China's first cross-border cooperation in the automotive industry technical cooperation center, through the establishment of joint laboratories with domestic and foreign auto companies, etc. In this way, Sinopec's petrochemical products such as lubricants, fuels, rubber and plastics are seamlessly integrated with automakers during the product development phase, enabling them to more sensitively grasp the trends of technology development and the latest needs of customers. Less than one year after the establishment of Sinopec Automotive Technical Cooperation Center, more than 20 lubricating oil products were jointly developed with auto companies, 37 domestic OEM certifications, 10 international OEM certifications, and 17 related products in the automotive industry. . At present, Great Wall Lubricant has already competed with international brands in the high-end lube oil market for vehicles, and has become a banner for local lubricants manufacturers in the automotive oil market.

Two camps, three legs
In 2009, local lubricants manufacturers accounted for most of the market share, up to 70%.

At the same time, local lubricant brands represented by the Great Wall and Kunlun have also made huge breakthroughs in the high-end market, with a market share of 40%. Successfully broke the "28" myth that foreign brands used to create in the high-end market.

In the automotive oil OEM market, the advantages of local brands are even more obvious. Only Great Wall Lubricants has become the common choice of 90% of the world's mainstream car makers, with a market share of 65%.

As the earliest open market in China, in the early 1990s, international lubricant manufacturers began to enter the Chinese market. In the face of a scattered local brand, international lubricant manufacturers are unstoppable and almost unified the entire high-end lubricant market. However, after 2000, PetroChina and Sinopec respectively integrated their lubricants business, launched the "Kunlun" and "Great Wall" brands, coupled with the rise of private enterprises, this situation began to change.

At present, China's lubricants market has formed a competitive pattern in which the two major camps, domestic lubricant manufacturers and international lubricant manufacturers, face each other. At the same time, local lubricants companies are divided into the “national team” of Sinopec and CNPC two oil company brands and a large number of private enterprises. They and the international lubricant companies constitute a “two camps, three pillars” market competition. pattern.

Both camps and tripartite forces have their own goals and survival forms.

For international lubricants manufacturers, they hold high and fight high, hoping to continue to maintain their dominance in the high-end market, but under pressure from competition, they have to start to move closer to the low-end market.

The “national team” Sinopec Corp. and PetroChina are responsible for the development of independent lubricating oil brands and domestic alternatives. They are engaged in “value warfare” with international lubricating oil manufacturers, tying up international companies at the product and technology level, and also gradually narrowing down International manufacturers' brand gap. According to a survey report by the third-party assessment agency Century Blueprint, “Great Wall” is already the most recognized lubricant brand in China. In the ranking of China's 500 Most Valuable Brands released in 2009, the value of the Great Wall Lubricants brand reached 12.7 billion and it has been growing at a rate of more than 1 billion yuan for many years.

Private enterprises are living in the gap between international lubricant manufacturers and the "national team" and rely on price wars to survive. However, with the upgrading of the industry driven by the high-end lubricants market, the role of price warfare has been attenuated indefinitely. Ultimately, it may only be life-saving. In particular, the implementation of the National IV Standard will lead to the exodus of a large number of private enterprises, which further exacerbates the private sector. Business survival pressure.

The Chinese lubricants market is becoming the most important market in the world, and it is a strategic market where lubricants manufacturers can't give up. Whether it is the high-end trend driven by the dynamic market demand or the development needs of the healthy brand, the high-end lubricants market will become the top priority of the strong lubricating oil manufacturers, in accordance with the current market structure and the business survival status of the company. From a perspective, the ultimate game between the two sides will only occur between the international lubricant manufacturers and the "national team."

At present, China's lubricants market has begun a new round of brand marketing wars, "Mobil + F1 top team", "Shell + Ferrari", the international brand is deducting its wonderful, and local lubricants manufacturers experienced in the grass, follow, follow After the imitation, it competed with international lubricant manufacturers. Compared with international manufacturers, the local lubricant companies represented by the Great Wall and Kunlun pay more attention to the social effects and value of brand marketing. Up to now, Kunlun has held six public charity events that “the country's top ten courageous and good drivers”. While promoting social virtues, it also highlighted the brand's “caring” concept; Great Wall Lubricants and China’s space industry have more than 50 years of history. It has been providing lubrication guarantees for all of China’s space missions and was recently awarded the “Outstanding Contribution Award of China Space Fund”. Great Wall Lubricant started its space strategy from 2003 and based on space, in the long-term lubrication of China Aerospace, it endeavored to civilianize space lubrication technology, and through its activities such as the Space Experience Camp, it worked tirelessly to improve people’s awareness of space. Win more trust for its brand.

The lube oil market is more prosperous. After undergoing economic environment and market competition, the market trend of “two camps and three pillars” will not change much. However, due to the change in the competitive strengths among manufacturers, the odds of success are different. In particular, in the high-end market, the "national team" is ambitious and already has the strength to exceed the aspirations.

The change in market dynamics is the internal driving force of the lubricants market, which determines the direction of the development of the lubricants market. The continued growth of the lubricants market reflects the positive trend of economic performance and the gentrification of lubricants. Reflect the upgrading of China's industrial industry and the sustainable development of the economy.

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