We have assessed a positive and promising outlook for the lubricants segment in Brazil, which will continue to grow in 2024.
Publicado 25/06/2024
We have assessed a positive and promising outlook for the lubricants segment in Brazil, which will continue to grow in 2024. Some factors contribute to the segment's post-pandemic recovery, such as the increase in motor vehicle sales over the last 12 months, continued growth in agricultural production and the overcoming of some logistical and infrastructure bottlenecks.Some factors contribute to the post-pandemic recovery, such as the increase in sales of motor vehicles over the last 12 months, continued growth in agricultural production and the overcoming of some logistical and infrastructure bottlenecks that, for example, impacted the import and purchase of base oils.
We can see the resumption of volume and profitability, which are good winds that should continue over the next three years. In 2023, we can also see the reversal of a process of deterioration in the mix of products sold in oil changes, such as the reduction in top-up.
Estimated to be the sixth largest lubricant market in the world, with a volume of approximately 1.35 billion liters or 8.5 million barrels, Brazil achieved a volume growth of approximately 6% in 2023, higher than in previous years since the severe impact of the pandemic. The agricultural market, for example, achieves record grain production year after year and has been the biggest driver of lubricant consumption in the country. In this scenario, we must consider Brazilian agribusiness in its continuous investment and high rates of mechanization and automation, which demands continuous lubrication.
The lubricants business in Brazil is undergoing a transformation: the demand for premium products, driven by a search for a highly efficient, low-carbon economy, and the advent of electrification are no longer a trend, but a potential reality.
After the pandemic, the companies that managed to implement a supply matrix with strategic partners differentiated themselves through efficiency, flexibility and reliability for their customers, which was evidenced as the greatest value addition, unlike in the past.This is different from a period when the market understood these components as the basis of a commercial relationship captured in essence by the term "take for granted".
There is also an "open road" of upgrading opportunities in the market that will have a positive impact on the base oil matrix in Brazil. For example, the volume of premium lubricants sold to the market, which are needed to meet the demands of modern engines, is still not compatible with the number of new vehicles on the market. However, this scenario should change in this decade.
The important thing is that the lubricant production chain in Brazil already has all the necessary resources to support this movement, such as additive technology and the availability of quality base oils. However, the points that require attention and careful analysis are issues related to distribution logistics and tax tax management, due to the great distances between the country's cities and the different tax regimes in the states of the federation. The latter, we believe, will be resolved by tax reform.
One of the advantages that needs to be highlighted in the Brazilian market is the preponderant role of the regulatory agent - the ANP (National Agency for Petroleum, Natural Gas and Biofuels). Its regulatory and educational activities include the rules that need to be adopted for those wishing to enter the lubricants business, such as adherence to the registration of producer or importer of lubricants, which includes audits at the factory and the need to register all automotive products.
The agency takes the lead in monitoring and auditing the volume of used oil that needs to be collected. Anyone who fails to comply with the rules on the percentages that need to be collected faces severe fines. By 2024, the average target will be 48.3% of the total volume produced. In this case, some types of lubricants, mainly those for loss lubrication, are exempt. This is an essential factor in promoting the circular economy in the country. The country has made positive progress in this area, exceeding the mandatory percentage of 47.5% by 2023.
In the field of ESG, we analyze that the transition to electrification will not only be driven by sustainability, but also by competitiveness, better embedded technology and/or greater customer satisfaction offered by the automotive industry in the electric/hybrid segment. Brazil is a few steps ahead in the use of renewable energies, both in the energy and electrical matrix. For example, the renewable energy matrix represents 48% compared to 15% globally. The same goes for the electricity matrix, which has a renewable content of 83% compared to 17% on the international average.
Considering all of the above, we can say that the Brazilian lubricants market is an essential activity, is on a growth path, is ready and has good opportunities for investment.
Voltar
Voltar