ILMA Compoundings - October 2020 - 28

A Year of
Change
Beyond its challenges, 2020
has brought with it several key
developments in lubricant specs
By H. Ernest Henderson, Ph.D.

OCTOBER 2020

| COMPOUNDINGS | ILMA.ORG

of stable times. The same was observed for Canada, where
demand declined from approximately 0.83 ktpa in 2007
to 0.69 ktpa in 2013, whereas Mexico actually realized an
increase in demand from approximately 0.69 ktpa in 2007
to 0.71 ktpa in 2013.
COVID-19 is projected to again impact demand in the
U.S. and Canada with new baselines established that will
be more severe than those observed during the 2007-2013
period. The severity of the change is still somewhat unclear
as the countries are still in the stage of exiting from the
pandemic. The process is somewhat bumpy, with advances
and setbacks on country, region, state/province and city
bases. Current estimates are that the pandemic will result in
a decline in lubricant demand during 2020 of between 10%
and roughly 25%, depending on the product sector and
country (Table 1).
Figure 1. U.S. Lubricant Demand, 2007-2013
Sources: K & E Petroleum Consulting, IHS Markit

8,500

8,000

ktpa

eyond 2020, the lubricants industry and, in particular,
the automotive sector will see continuing shifts in
equipment design, performance, oil quality and overall
lubricant demand that will likely never be seen again.
The first major industry change has been as a result of
COVID-19. The pandemic not only shut down the North
American economy, but has continued to strangle many of
the businesses that support the economy. The region has
continued to struggle to restart in a time when a vaccine has
yet to be commercialized and made available to the public.
Lubricant demand came to a standstill as people were encouraged to remain at home with the hope that the coronavirus
pandemic would dissipate. This created an oversupply of petroleum products like gasoline that, at times, was retailing at less
than $1 per gallon. Roads and highways were essentially vacated
as only trucks occupied the space to deliver essential goods and
services to distribution points and eventually consumers.
Auto plants and supporting factories closed, small
businesses suffered significantly and unemployment grew to
levels not seen since the Great Depression. Even now, some
six months since the airports were closed to international
travel, the lubricants industry remains mired in an oversupplied position with reduced demand.
During the economic crisis of 2008-2010, the North
American lubricants industry recovered, albeit at a lower
"norm" in terms of demand. Figure 1 shows U.S. demand
from 2007 that would represent the "former norm" of
approximately 8.5 kilotonnes per annum (ktpa), or 2.6
billion U.S. gallons, and 2013 that represents the "adjusted
norm" of approximately 7.4 ktpa, or 2.3 billion U.S. gallons.
The reduction in demand from 8.5 ktpa to 7.4 ktpa represented a decline of nearly 13% of the baseline representative

7,500

7,000

2007

2008

2009

2010

2011

2012

2013

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ILMA Compoundings - October 2020

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