Despite recently slower growth for lubricant producers, demand is expected to recover
New York, NY (PRWEB) June 01, 2014
The Lubricant Oil Manufacturing industry experienced wear and tear during the recession due to falling consumer income and less manufacturing activity. These factors compelled consumers to drive less and delay car expenditures, while car manufacturers idled or exited factories. As a result, fewer lubricant products were purchased and industry revenue plummeted in 2009. However, downstream demand strongly rebounded as industrial production picked up after the recession. Therefore, IBISWorld expects industry revenue to increase at an annualized rate of 4.1% to about $18.0 billion during the five years to 2014.
However, major industry growth occurred in 2010 and 2011, as revenue climbed 18.8% in both years. Since then, however, lubricant production and revenue growth have slowed. According to the Energy Information Administration (EIA), lubricant production from blending plants fell 7.2% in 2012 and, despite some production growth in 2013, it is expected to fall again in 2014. Industry operators, especially smaller operators, primarily consist of petroleum blenders. IBISWorld expects that lubricant production from blending plants will fall in 2014. Petroleum product prices are also expected to moderately decline during the year. Consequently, revenue for the Lubricant Oil Manufacturing industry is anticipated to contract 7.9% in 2014, due to falling lubricant production volumes and slow price growth.
According to IBISWorld Industry Analyst Edward Rivera, “While industry revenue slightly contracted over the past two years, industry profit margins are anticipated to rise over the five-year period, thanks to recovering demand from downstream manufacturing markets, coupled with rising input costs that can more easily be passed on to consumers as demand rises.” The industry has also benefited from effective cost-cutting measures. Over the past five years, wages' share of revenue has fallen thanks to these trends. The average industry profit margin is therefore expected to increase in the coming years, as wages and operating costs continue to fall.
Nevertheless, as economic growth and industrial production pick up, demand for lubricants is forecast to strongly grow. “Industry operators will also expand production to cater to growing demand,” says Rivera. As a result, industry revenue is forecast to grow at an average annual rate of 4.0% to $21.8 billion during the five years to 2019.
For more information, visit IBISWorld’s Lubricant Oil Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Lubricant Oil Manufacturing industry manufacture petroleum products (except for asphalt-paving, roofing and saturated materials), such as blended motor oils, brake fluids, lubricating grease and other oil-based additives. Key buyers include downstream automobile manufacturers, wholesalers and automotive retail chains.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.