Market Leader - COVID-19 Impact on Lubricants Market
The global lubricants market size is projected to decrease in 2020 from 2019, at a negative growth of 0.95%, in terms of value. COVID-19 has negative impacts on industrial production and vehicles on road, which is expected to decrease the demand for lubricants in 2020. The demand in countries such as China, India, Japan, and the US is expected to decline from both the transport and the industrial sectors.
The lubricants market is evolving, with major players playing a crucial role in the development of new and advanced products. Royal Dutch Shell plc (Netherlands), ExxonMobil Corporation (US), BP P.L.C. (UK), and Total S.A. (France) are the major players in this market.
On the outbreak of COVID-19, where production and supply chain of companies are hampered, ExxonMobil ensures smooth and safe functioning of its refineries, lubricant and chemical plants, and other facilities worldwide to meet the energy needs during this crisis. The company is taking short-term actions, such as reducing the near-term capital and operational expenditure and diversifying resources in the production of isopropyl alcohol for hand sanitizers. It also manufactures a wide range of products that serve as a building block for products used in health, hygiene, and sanitization applications such as performance fluids, polypropylene for production of face masks and medical gowns, oxo alcohols for production of surfactants used in cleaning products. The company is utilizing resources from other lines of businesses to increase the manufacturing of these products. It is entering into a new line of business and has initiated multi-sector and joint development projects to rapidly design and manufacture reusable personal protective equipment for health care workers such as face shields and masks to meet the high demand caused by the pandemic.
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As the negative impacts of COVID-19 continue, the company is focusing on the safety and health of its people and customers, along with the safe business operations around the globe. At each operating site, it is following business continuity plans to sustain its operations and supply chains, to provide vital energy products to countries, communities, businesses, motorists, and homeowners. With a drastic increase in demand for hand sanitizers, hand wash, and surface cleaner products, the company is diversifying its resources in increasing the production of isopropyl alcohol (IPA) and alpha olefin, the main ingredients for hand sanitizers and hand wash, respectively. Despite decreasing crude oil prices, the company is not reducing the price of the final product to balance the loss incurred due to the hampered production and supply chain.
The COVID-19 outbreak is expected to have a negative impact on BP plc’s Q1 2020 results. For the next three quarters, the company is likely to reduce the organic capital spending by 25% from that of planned spending for 2020. The reduced spending will be USD 12 billion for 2020 in comparison to planned spending of USD 16 billion for the same period. In Q1 2020, the company reported upstream production to be lower than that of Q4 2019. The downstream refining availability is expected to be in a range of 95%-96%. The company also expects downstream businesses to be impacted by significant declining demand for fuel, jet fuels, and lubricants, as all countries across the globe implemented significant measures to overcome the spread of COVID-19.
The drop in oil prices and a decline in global demand due to COVID-19 are impacting oil and energy companies. Total SA is also facing the heat due to declining crude oil prices. The decline in crude oil prices has also impacted the other integrated businesses of the company. To sustain and overcome this scenario, Total plans to lower the capital expenditure by 20% to USD 15 billion, as compared to USD 18 billion planed earlier for the year. Subsequently, the company will delay the expansion plans and decrease capital expenditure to maintain liquidity. It is implementing a short-term strategy for increasing more savings in 2020 as compared to the planned amount. Now, it is targeting USD 800 million of savings on operating costs in 2020 as compared to USD 300 million planned previously. To boost liquidity, the company also suspended the share buyback program worth USD 2 billion.
Related Reports:
COVID-19 Impact on Lubricants Market by Product Type (Engine Oil, Hydraulic Oil, Compressor Oil, Metalworking Fluid, Gear Oil, Turbine Oil, and Grease), End-use Industry, and Region - Global Forecast to 2021
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