Lube market shrinks in 2Q19 as no catalyst to boost demand

Sri Lanka’s lubricants market narrowed with an across the board fall in the volumes during the three months ended in June 2019 (2Q19) as the industry is battering a broad-based economic downturn, which it has become an indirect casualty.  

Demand for lubricant is generally a sound barometer for an economy’s overall health and more specifically in sectors such as vehicle ownership, construction, demand for energy, agriculture and fisheries.

Sri Lanka’s 13 licensed lubricant market players sold 14,852 kilo litres of lubricants during the April-June quarter, down from 16,228 kilo litres in the same period a year ago. 
It was no surprise why the number had sunk so badly as the three months under watch were marked by the worst period in many years, where the Easter bombings paralysed the economy. 

Chevron Lubricants Lanka PLC, the local unit of the global energy giant, Chevron Corp., gained some market share as Lanka IOC PLC lost its ground while some of the smaller players also losing their share. 

Chevron’s market share on a relative basis rose from 38.46 percent to 40.88 percent during the two periods but the volumes declined at Chevron from 6,242 kilo litres to little under 6,072 kilo litres making any gains meaningless. 

Lanka IOC PLC, which had a market share of 14.88 percent or 2,414 kilo litres by June 2018, fell to 12.21 percent or 1,843 kilo litres year later.  
Meanwhile, the third largest player, Laugfs Holdings Limited, held its ground with 10.97 percent share or 1,628 kilo litres. 

Laugfs made a rapid gain in rankings in the softest period in Sri Lanka’s highly fragmented lubricant market. 

Meanwhile, ExxonMobil also stood ground being the fourth largest player with a 9.53 percent stake despite a slight slippage in the volumes, followed by Bharat Petroleum Corporation Limited, which had a 6.79 percent share making a substantial gain from 5.14 percent share a year ago. 

The company’s volumes also rose from 834 kilo litres to 1.0 million. 

The state-owned Ceylon Petroleum Corporation continued to lose ground falling to the sixth place with a share of 5.29 percent or 786 kilo litres. 

There was mixed performance seen of some of the smaller players during the two periods, although the overall figures pointed towards a downward trend. 

The analysts broadly hold a negative outlook for the lube industry without a significant catalyst to turn the odds in its favour, which could likely come from the presidential elections towards November this year.