Driven by both supply and demand, how will the lubricant market be in 2022?

In 2021, price increases became the hot word
of the year in the lubricant market.
Especially in the second half of the year, major brands have issued price adjustment notices, which also caught many dealers with less inventory by surprise
.
With the arrival of the new year, although the sound of price increases is gradually receding, under the calm, a new round of price increases is expected to heat up
.

Winter is the low season for the lubricant market, but many dealers have carried out anti-seasonal stocking
.
A distributor of Sinopec Great Wall Lubricants said that before the price increase in November last year, there was no timely stocking, which had some impact on operating profits and supply, referring to last year's experience, this year to make sufficient preparations, after all, large brands are more popular and not worried about selling
.

Raw material prices run at a high level and the expectation of an increase is still there

From the cause of the increase in the price of lubricants last year, the rise in upstream prices, especially the price of raw materials such as international crude oil and additives, is the main driving factor
.
From the main composition of finished lubricants, 85-90% of the raw materials are base oils, 10-15% are additives, in addition to plastic or metal packaging
.

In the near term, although raw materials have undergone a brief adjustment, they have maintained a high level of operation, and the upward momentum is still there
.
As of December 30, 2021, the international oil price closed at $76.
43/barrel
.
Compared to the price at the beginning of the month, the increase is close to 15%.

According to this trend, oil prices, which have just cooled down, may continue to rise again in the future
.
There are even forecasts that international oil prices are likely to rise to $100 per barrel this year, exceeding last year's
high.

In terms of additive costs, lithium hydroxide is one of
the raw materials with the largest price increase in 2021.
According to the data of the bulk list of business cooperatives, the average price of domestic industrial-grade lithium hydroxide enterprises was 52,000 yuan / ton on January 1, 2021, and as of December 31, the domestic industrial-grade lithium hydroxide quotation was 225,000 yuan / ton, and the market rose by much more than 300%
during the year.

Some analysts said that due to the continuous high level of raw material prices across the year, even if they experienced price adjustments last year, lubricant companies are still facing a lot of pressure
.
If this trend continues, a new round of price increases in 2022 is still inevitable
.
In this case, counter-seasonal stocking by channel distributors such as Great Wall Lubricants is also a wise measure
to resist the risk of price increases.

Lubricant demand gradually recovers The outlook is generally promising

As the blood of industrial operation, the market consumption scale of lubricants depends on the degree of
economic development.
From this point of view, with the strengthening of the automotive industry, construction machinery, energy and chemical industries in 2022, the overall consumption potential of lubricants will be further released
.
Especially in the booming automotive market, automotive lubricants have reached about
60% of the total lubricant consumption.

The person in charge of a car repair shop said in an interview that due to the relatively long use cycle, users are not very sensitive
to the terminal price of lubricating oil.
Although product prices have risen last year, sales have remained largely unaffected
.
Users are more concerned about brand and quality, and many customers will directly specify a big brand
such as Great Wall Lubricants.
At present, the inventory in the store has begun to be tight, and it is being prepared to stock up
in advance.

In the manufacturing sector, industrial lubricants are at a tipping point
in the market explosion.
With the implementation of China's manufacturing and carbon peaking, carbon neutrality, a new round of infrastructure construction and other national strategies, the rise of construction machinery, wind power, ocean transportation, and high-end equipment manufacturing will further increase the consumer demand
for industrial lubricants.
Looking at the entire market, there are not many lubricant brands with this supporting ability, and brands such as Great Wall Lubricants that not only have high-end innovative technology, stable quality control system, but also can meet environmental protection needs and provide one-stop services will become a scarce resource
.
From this point of view, the advance preparation of enterprises with large amounts of lubricating oil is undoubtedly the early locking
of advantageous resources.

From the continuous rise in raw material prices to the scarcity of high-end products, both supply and demand levels have the motivation to drive lubricants to rise again
.
For dealers with the goal of reducing costs and increasing profits, increasing inventory reserves before price increases is undoubtedly the best choice
.