Brazilian lubricants market 2020
The Brazilian Lubricants Market showed an impressive reaction in the second half of 2020, with a recovery in losses caused by the Covid-19 pandemic that led to the closing of the year numbers to record a very small reduction, around 1%, compared to the strong 2019 year.
It was a year that was totally out of any standard or subject to prior planning. The Brazilian lubricant market behaved, in the first months of the pandemic, just like so many others, that is, equal to the country’s economy and, mainly, to industrial production. The fall in April was somewhat impressive, with a 44% drop in lubricant sales, bringing very uncertain and negative prospects ahead. Even with the improvement in sales already appearing in May and June, showing the much talked about “V” recovery format, the market closed the first half of the year with a drop of 12.6% compared to 2019.
The second half of 2020 started with a lot of force, placing the month of July as a sales record holder. At first it could be imagined that such an abrupt recovery would encompass a possible replenishment of stocks and that it would soon fall to historical levels. There was actually a drop in sales in the other months of the second half, however, with very high numbers, only surpassed by the month of July, with September and October at levels very similar to that of the record month. Thus, there was a strong compensation for losses in the first half, reaching a total volume of 1.35 million cubic meters, leaving 2020 with only 1% difference from 2019, significantly above the last 5 years.
The lubricants market, as expected, reflected the movement also carried out by the Brazilian GDP and had a great influence on the automobile industry, which showed a growth of more than 41% in the second semester, even though it closed the year with a fall of 4.5% compared to 2019.
Among the segments of application of lubricants, the highlight was the growth of agricultural spray oils, with a growth of 37.6% in relation to 2019, possibly portraying the record harvest of the year 2020. Industrial oils also showed growth , around 6.5% while automobiles suffered falls, with the Otto cycle falling 3.2% and the Diesel cycle 2.4% in relation to 2019.
The dispute for the first positions of the distributing companies in the Brazilian lubricants market remains extremely fierce, with ICONIC and BR Distribuidora disputing the first position in tenths of percentage points, and alternating in the leadership during the course of the year. At the close, ICONIC had 18.6% of the market, while BR gained a share of 18.3%. Moove comes in third place with a 13.7% share, followed by Shell with 9.9% and Petronas completing the “TOP FIVE” of the market with 8.1%. When we expanded the focus to the top ten companies in the Brazilian lubricants market, we found YPF running in sixth place with 2.1% share, followed closely by Energis 8 and Ultrax, both with 1.7%, followed by Ingrax and Castrol with 1.5% each, with some differences between the last ones in hundredths of percentage points.
The National Agency of Petroleum, Natural Gas and Biofuels – ANP receives, through its Product Handling System – SIMP, the numbers of all the companies in the market, which pass on production, sales and all the movement they do with lubricants. These numbers are published by the agency according to the information received. It turns out that any difficulty that companies have in relation to adapting their accounting assumptions or even the classification of their products to the ANP system, may cause some distortion in the volume actually sold, in relation to that reported to SIMP. Therefore, a thorough analysis of the market, such as the one carried out by this magazine, requires a detailed comparative assessment between the real numbers of the companies and those presented by the ANP. Thus, there may be a difference, sometimes important, especially with regard to market share between the agency’s official publication and what is shown in this article. It is worth remembering that the analysis presented here includes the numbers checked with the companies involved.
Market by region
The Southeast region, encompassing the states of São Paulo, Rio de Janeiro, Minas Gerais and Espírito Santo, continues to be the largest market in the country, representing about 44.7% of lubricant sales, with only the State of São Paulo having almost a quarter of national consumption. Next comes the South region, with 20.5%, Northeast with 13.8%, Central West with 11.7% and North with 9.3%. The volume presented by the North region meant a 14% growth in sales, compared to 2019, calling attention to the good performance of this region.
Brazil is today, and will continue to be, for a long time, a major importer of base oils, mainly the ones of groups II and III. The production of Brazilian refineries in 2020 represented around 34% of the country’s needs, with RLAM, in Bahia, in the process of selling, producing practically nothing this year, and only REDUC, in Rio de Janeiro produces group I base oil, since LUBNOR, in Ceará, only produces naphthenic oil (group V). The re-refining industry collaborated significantly, placing on the market around 246 thousand cubic meters, equivalent to 18% of the country’s production, with around 42% of this volume of group II base oil produced by Lwart Lubrificantes, the only one with this technology in the country.
Petrobras has already announced its intention to execute the decommissioning of one of REDUC’s two production trains, a process that was not carried out in 2020 due to the great desperation of the market due to an international supply crisis, causing the refinery to produce in both months, an amount higher than the monthly average for the year.
With this national production profile, Brazil needed to import 653,662 m3 of base oils in 2020, which represented 48% of its demand, with a disbursement to the country of an amount around US $ 371 million. The United States was the major supplier of basic products for this import, with 75.9% of the total, followed by countries such as Malaysia (5.2%), South Korea (5.1%), Bahrain (3.0%) , Qatar (2.3%) and others.
The Brazilian lubricants market did a demonstration of strength and resilience in the year 2020, exceeding any expectations and forecasts for such an atypical year. It has also shown that it has good logistical and distribution capacity, as well as growing commercial and technological maturity. The big question that exists for a better performance in the future are the investments to be made in the country’s refining sector, which lately has only aimed at the production of fuels, creating an external dependence of almost half of what it’s base stocks consumption. The foreign market was prepared to meet the growing demand for groups II and III and, under normal conditions of global supply, is capable of producing enough to meet world demand. As Brazil has not yet decided which path to take concerning the supply of base oils, it is located at the buying end of this market, entering into great apprehension with each hurricane formed in the Gulf’s region, or with each situation of production restriction in other countries. The recovery of the Brazilian economy will certainly come sooner or later, and the problems of internal logistics, such as transport and storage, are expected to grow with the increase in imports. Meanwhile, the Brazilian lubricant market remains to await the interest of governments and possible partners in investing in the production of better quality base oils.