Mercosur Leads Demand for Lubricants in Latin America
21 October 1999
Mercosur Leads Demand for Lubricants in Latin America; The Most Striking Opportunities Emerge From Added Value, Not Volume
LITTLE FALLS, N.J., Oct. 21 -- Mercosur -- comprising the
member countries Brazil, Argentina, Uruguay, and Paraguay, and the associated
countries of Chile and Bolivia-leads in demand for lubricants in Latin America
in 1999, according to a new study by Kline & Company, Inc., a New Jersey-based
management consulting firm. "This trade region accounts for close to 55% of
total Latin American demand. Demand in Mercosur is driven primarily by
Brazil, which accounts for close to 70% of the Mercosur's total," notes Thomas
F. Glenn, business manager at Kline.
Overall, the market for finished lubricants in Latin America is forecast
to reach close to 900 million gallons in 1999 or roughly 10% of total
worldwide demand, according to Kline's upcoming report, BUSINESS OPPORTUNITIES
IN THE LATIN AMERICAN LUBRICANTS MARKET, which will examine the supply and
demand for finished lubricants in four distinct but interrelated trade regions
in Latin America: the Andean Community, Mercosur, Mexico, and others, which
includes CARICOM and SICA. According to Glenn, "Demand for lubricants in the
Andean Community, including the member countries of Venezuela, Colombia,
Ecuador, Peru, and Bolivia, is expected to exceed 150 million gallons in 1999.
Venezuela takes the lead in the Andean Community, accounting for an estimated
35% of the region's total; Colombia is a close second. Mexico accounts for
over 20% of lubricants consumed in Latin America."
Glenn notes, however, that the "real story is not the volume of lubricants
consumed in the region, rather, it's the value and the emerging business
opportunities that are of greatest interest." To illustrate the value issue,
Glenn notes that "a straight grade engine oil with an SF/CC API rating will
sell for close to $2.50 a quart in Mexico and it's not unusual to see ATF with
a Dexron II rating selling for close to $3.00 a quart."
On the opportunity front, Glenn points to Venezuela as an example of how
liberalization has given rise to business opportunities. Venezuela, by far
the largest lubricant market within the Andean region, was until very recently
the least diverse. Now it is the most rapidly changing and certainly the most
interesting. According to Glenn, "Finished lubricant sales of virtually all
types have been monopolized for years by Deltaven, a branch of Petroleos de
Venezuela (PDVSA), the national oil company. But in 1995, foreign competition
in the lubricant market was legalized. The first player in was reportedly
Mobil. Shell, BP, and Texaco soon followed and each now enjoys a significant
share of the finished lubricants market." Other entrants into the Venezuelan
market following liberalization include Castrol and Elf.
Glenn also notes that business opportunities in the region are emerging as
a result of geographic shifts in manufacturing. One example of these shifts
is the increase in automotive manufacturing sector in Mexico. Kline's study,
BUSINESS OPPORTUNITIES IN THE LATIN AMERICAN LUBRICANTS MARKET, is designed
specifically to identify business opportunities arising from shifts in
manufacturing, privatization, economic development, and other drivers in the
Latin American market. In addition, Glenn notes, "the study will focus on the
competitive forces in the region and import and export trade activity."
Established in 1959, Kline & Company, Inc. is recognized around the world
as one of the leading business consulting firms specializing in the petroleum
products and chemicals industries. The Petroleum and Energy Practice has
conducted numerous proprietary projects and syndicated surveys on lubricants,
basestocks, fuels, additives, waxes, and other petroleum-related products.
For more information on Kline & Company or its report, BUSINESS
OPPORTUNITIES IN THE LATIN AMERICAN LUBRICANTS MARKET, please contact Thomas
F. Glenn, business manager, at Kline & Company, Inc., Overlook at Great Notch,
150 Clove Road, Little Falls, NJ, 07424, 973-435-3410, or by e-mail at
Tom_Glenn@klinegroup.com.