COVID-19 Impact on the Lubricants in Chemical and Materials Industry

COVID-19 Impact on the Lubricants in Chemical and Materials Industry

  • Chemical and Materials
  • Oct 15, 2020

COVID-19 Impact on the Lubricants in Chemical and Materials Industry

INTRODUCTION

Lubricants are kind of substance which are usually manufactured with organic and inorganic substances. Lubricants are applied on the surface to reduce friction between surfaces in mutual contact, which resulted in ultimately reducing the heat generated between the surfaces and increases the life of the machinery. Lubricants have the viscosity properties which help in transporting foreign particles, function of transmitting forces or heating or cooling the surfaces. In lubrication, several lubricants are used which have different properties and helps to control the friction and wear the lubricants make a friction-reducing film between moving surfaces in contact of the surfaces. The lubricant can be in the form of fluid, solid or plastic substance.

Several different substances are used to lubricate a surface of machinery or part of equipment. Oil and grease are the most common lubricants used in the industries for lubrication processes. Grease is a type of lubricant which is composed of oil and a thickening agent to obtain its consistency. Oils which is also a type of the lubricant is synthetic, vegetable or mineral-based as well as a combination of other products help to reduce the wear and tear of the equipment while working. Lubricants have the different properties and the viscosity indexes according to those lubricants are used in different applications. Lubricants are more used in the industries to reduce the heat generation among surfaces which has helped to lower the cost maintenance of the large machineries.

The primary functions of lubricants are:

  • Reducing friction among surfaces
  • Prevent wear of equipment
  • Protect the equipment and machineries from corrosion
  • Control temperature of the surface
  • Control contamination
  • Transmit power
  • Provide a fluid seal

Lubricants are the type of additives which are applied on the machines or the equipment used in the industries for manufacturing of the finished goods. With the increasing automation in the large or the small scale industry, the demand for the lubricants will increase in all the regions. Different types of lubricants are mineral based, bio-based and synthetic based which are further divided in boundary, mixed and full film. Full-film lubrication are the type of the lubricant which can be broken down into two sub-types which are hydrodynamic and elastohydrodynamic. Hydrodynamic lubrication are used on two surfaces in sliding motion and elastohydrodynamic lubrication are applied the surfaces which are in a rolling motion. Lubricants have polished and smooth surfaces along with irregularities present on the surfaces. Boundary lubrication is applied where frequent starts and stops of the machineries is done, and where shock-loading conditions are present. Some oils have extreme-pressure (EP) or anti-wear (AW) additives to help protect surfaces and increase the life span of the machinery. Mixed lubrication is done between boundary and hydrodynamic lubrication. While the bulk of the surfaces are separated by a lubricating layer, the equipment still makes contact with each lubricant as additives again come into play.

IMPACT OF COVID-19 ON LUBRICANTS INDUSTRY

The COVID-19 have created the pandemic situation in all over the word due to which the economy of all the regions have been affected on the larger extend and will recover in very steady pace. No sector is immune from the effect of the COVID-19, all the manufacturers in the regions have faced the ups and down in the business due to the COVID-19 situation. The government and the higher authorities have taken strict actions for lowering the spread of the COVID-19. The pandemic have hit the economy very hard world wide as the lockdown was imposed in all the regions which have made the situation challenging for all sectors for growth and also the developing actives will be done in the stage wise manner. COVID-19 has also affected the import and export of the lubricants products across all the regions due to which the demand of the lubricants have declined.

Due to the lockdown in all countries because of growing spread of the COVID-19, a major slowdown in transportation and people movement has been observed. The demand for the basic goods is still on the rise, and thus all the other items are facing the fall in demand. Due to the rising COVID-19, carrying of goods from one location to another has been significantly curtailed as distribution chains have nearly stopped. Lubricants are used in several industries for the machinery and equipment maintenance. COVID-19 have halted the production of several goods due to the lock down due to which the demand of the lubricants in the industries have fallen down which resulted in the increase in the piles of the inventory of the lubricants with the manufacturers during the COVID-19. The COVID-19 have created the challenge for the lubricants manufacturers for the production of the lubricants as most of the raw materials are imported from other regions.

Manufacturers are also facing the problem for the production of the lubricants of different grades and viscosity according to the demand in the lubricants market due to which manufacturers are not able to generate revenue during the COVID-19 outbreak. The demand of the lubricants in the large finished product industries have fallen down by 20% - 23% during the COVID-19 as the demand for the lubricants have fallen down. Several industries production was on halt and also many industries were running at 40% - 50% of their existent capacity due to declining demand of the finished products in the lubricants market.

COVID-19 have created the several challenges for the lubricants manufacturers in operation and customer satisfaction of the products and also movement of stock is highly dependent on contract labourers who are currently unavailable due to government regulations in the COVID-19 due to which the demand of all kinds of the lubricants such as synthetic, bio-based and minerals have fallen down. COVID-19 have affected the automotive industry and transportation sector in all the regions due to which the demand of the lubricants products have fallen down.

HIGH USE OF LUBRICANTS IN DIFFERENT INDUSTRIES

IMPACT ON AUTOMOTIVE INDUSTRY

The COVID-19 pandemic has had a rapid impact on the lubricants market for automotive goods and on the globally interconnected automotive industry. Symptoms include a disruption of shipments of Chinese products, large-scale production interruptions throughout Europe, and the closure of assembly plants in the U.S. The manufacturing and assembling of the automobiles have declined due to which the demand of the lubricants used in the manufacturing of the automobiles such as car, passenger’s vehicles have declined. Automotive and Center for Macroeconomics teams have stated that the automotive sales have decreased to 14-22% among the China, U.S. and European markets in 2020 due to the COVID-19. The engine regulations for BS-4 have also changed due to which the demand of the automobiles have been affected which have the negative impact on the lubricants industries during the COVID-19.

  FIGURE 1    LIGHT VEHICLE SALES BETWEEN FEB 2019 VS. FEB 2020 (IN THOUSAND UNITS)

covid-19 impact on the lubricants in chemical and materials industryFrom the above chart, we can infer that the demand of the light vehicle have declined in several countries as in China, the sale of the light vehicle was 1400 thousand units in February 2019 which declined to 200 thousand units in February 2020. In Japan, the sale of the light vehicle was 450 thousand units in February 2019 which declined to 400 thousand units in February 2020. In South Korea, the sale of the light vehicle was 150 thousand units in February 2019 which declined to 120 thousand units in February 2020. As the sale is declining resulted in the lower production in the automotive industry which has resulted declination in the demand of the lubricants for automotive industry.

 IMPACT ON MACHINERY INDUSTRY

During the COVID-19, the lockdown was done in all the countries due to which the production of the finished goods fell down. The production of the new machinery and equipment which are used in the manufacturing have fallen down and also manufacturers are not able to put in more money in the business during the pandemic situation.

Industrial activity in the COVID-19 period has shrunk which has impacted the demand of various types of industrial lubricants including transmission and compressor oils, metal working fluid, agri-spray oils, turbine oils, greases, industrial gear oils, hydraulic oils and other industrial lubes. Different lubricants are used across various industries for running of the large and small machineries such as metals and mining, power, iron and steel, chemicals, cement, construction, railways, oil and gas, general manufacturing, and others. In the pandemic situation, considering that most industries and manufacturing sector have been impacted due to the lockdown in the countries which has affected the demand for industrial lubricants on the larger extend.

  TABLE 1    IMPACT ON KEY INDUSTRIES BY COVID-19 IN INDIA

Industry

Impact

Power

-25% fall in peak demand

Construction

Complete lockdown

Iron and Steel

-8% fall in 2020

Cement

Fall in 10–20% demand contraction

Railways

Complete lockdown

From the above table, we can infer that the COVID-19 have impacted the several industries and production activities in several regions due to which the demand of the machinery and other equipment in the large industries have fallen down which have resulted in a negative impact on the demand of the industrial lubricants.

IMPACT ON AGRICULTURE INDUSTRY

Agriculture sector have also been affected by the COVID-19 situation in all the regions. Agricultural actives have faced the shortage of the labor. Agriculture products include fruits, vegetables and several grains on which some of them have specified shelf life. During the COVID-19, the disruption in the supply chain has affected the agriculture industry. But on the other hand, the demand of the agriculture products or the organic products have been on rise during the COVID-19. With increasing demand of the agriculture products, the machinery have been used in the agriculture activities. The increasing use of tractors, grinders and other machineries have increased the demand for the agricultural lubricants in the global market. With increasing automation in the agriculture, the demand of the agriculture lubricant for different fleet will increase.

CONCLUSION

The COVID-19 crisis has created the pandemic situation widely which affected the growth of the lubricants market as the demand in the industrial machinery, automotive industry have fallen down in all over the world. As, the government imposed lockdown rules for all the manufacturing industries due to which manufacturers were not able to produce the lubricants for the specific application which lead to the huge loss to manufacturers and will show a steady growth in coming years. The supply chain have also become the challenge for the lubricants manufacturers as import and export of the finished goods and raw materials have become difficult in the COVID-19 situation.

Lock down for more than 3 months in the countries have resulted into the declining of the demand of the industrial lubricants and also the demand for the automotive lubricants have also fallen as the demand of the automotive have fallen down but on the other hand, with the increasing demand of the agriculture products, the usage of the lubricants in the agriculture machine have increased which have increased the demand for the agriculture lubricants in the lubricants market which help the manufacturers to earn revenue in the COVID-19 period. After the lock down, the manufacturing sector will increase on the pace which will help the industrial lubricants growth in near future.

COVID-19 TRACKER

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