The global grease market is projected to grow at a CAGR of 2.31% to reach a market size of US$5.429 billion in 2025 from US$4.732 billion in 2019. The importance of grease cannot be understated since it has the potential of extending the life of a product. The ability of grease to improve the overall efficiency has been instrumental in driving its demand over the years. Simultaneously, the rising investment in heavy machinery manufacturing is further projected to push the market growth. The steady improvement in demand has resulted in key manufacturers expanding their capacity in order to better cater to the requirement of the market. For instance, Aerospace Lubricants recently expanded to add 10 million pounds of grease capacity at its Ohio plant in the United States. Similarly, in October 2019, Axel – one of the leading manufacturers of lubricating grease, announced that it is advancing with its multi-million-dollar expansion and improvement plan for its three plants located in the United States. Moreover, SKF India has also recently launched its grease product “LNEP 2IN” that has been specifically designed to increase the service life of bearing operating in difficult working environment.
It estimated that Europe constitutes 47.05% share in the global industrial electronic production (source: Knowledge Sourcing Intelligence Analysis). The growing investment in the industrial electronics, aerospace, and automotive production in the region is estimated to provide an opportunity for the greasing solution providers to generate higher margins. In fact, grease manufacturers are investing heavily which could enable them to meet the rising demand for grease from the region. For instance, in June 2020, Rhenus Lub GmbH & Co KG launched a high resistant and resilient grease that has the potential to drive the down the long-term overall machine cost by significantly reducing the re-lubrication interval period. It has been designed to operate in harsh environment and applications in electric motor, casting plants, steel works, and hot-gas ventilators among others. Simultaneously, lubricating grease production in Europe increased by 1.2% in 2018 (source: National Lubricating Grease Institutes). Moreover, there is also a growing trend towards the adoption and production of a renewable source of energy globally. For instance, in Europe, wind energy remains the second largest form of power generation capacity and is expected to overtake gas installations by 2019 (Source: Wind Europe). Thus, the growing investment in wind energy is expected to drive wind turbine manufacturing, which in turn, is expected to provide significant revenue generation opportunities for the grease product providers.
Germany is considered to be the Europe’s powerful economy in terms of its share in the global trade. The exporters in the country witnessed a relative reduction in their profitability on account of weak demand from the United Kingdom, its third largest exporting partner, as a result of uncertainty caused by Brexit. However, with the UK’s economy steadily improving and as the economy settles in the new business setting, the profitability of the manufacturers in the country is expected to increase on account of anticipated increase in demand from the United Kingdom which is expected to push the growth of the grease market in the country.
On the other hand, Asia Pacific is the home of the world’s fastest and sustainable growing economies like India, China, and Indonesia and due to factors, such as rising infrastructure spending and rapid urbanization. For instance, the Government of China has doubled the value of large-scale infrastructure projects in 2019 than the previous year and recently NDRC (National Development and Reform Commission) has approved 21 projects worth at least US$100 billion. In addition, the growing middle-class population is providing a huge consumer base for the utilization of grease products in automotive, construction machinery, general manufacturing, and metallurgy applications among others. The growth of the market is being driven by rapid growth of automotive industry in this country. For more than a decade, China has retained its position of the world’s largest automotive producer on account of availability of cheap and skilled labor, and other resources required for automotive production. The total automotive production increased from 8.882 million units in 2007 to 29.015 million units in 2017. Despite a dip in automotive production in 2018, when the output slid down to 27.809 million units, the country will continue to account for a major demand for automotive grease, thus boosting the growth of the market. Passenger vehicles is estimated to be the primary revenue driver for the market owing to the higher production as well as sales of passenger vehicles in the region. Rising disposable incomes and living standards are continuously boosting the demand for cars in countries like China, India, and Australia. Moreover, growing global population base coupled with rising number of enterprises is augmenting the demand for passenger vehicles for public transport, thus bolstering the growth of the market. Automakers are constantly investing to expand the manufacturing facility across APAC to increase the production of passenger vehicles. Recently in February 2019, China’s largest automaker, SAIC Motor Corporation, is planning an additional investment of US$350 million in setting up a second manufacturing unit in India. As a result of booming passenger vehicle production and sales, companies are launching new products for this segment, thus positively impacting the growth of Asia Pacific grease market.
The automotive industry has to work as per the regulations aimed at reducing environmental emissions which requires the automotive manufactures to keep developing the techniques and adopt different materials for meeting the above objectives. As a result, the new materials must be tested so that they meet the requirement on performance, durability, quality, and reliability. Moreover, the growing competition among key players requires them to focus on reducing the development cycles. Thus, the use of grease solutions in the automotive is increasing because of its ability to significantly improve the performance of critical automotive components. However, the automotive production has been weak in the last couple of years due to fragile macroeconomic condition. The COVID-19 pandemic has further aggravated the production decline, with the overall demand anticipated to decline by more than 20%. Even though a significant proportion of grease demand for automotive applications comes from the after-sale market, the lockdown measure imposed by the government has significantly impacted the market demand from after-sale market as well.
Growing infrastructure investment across countries is expected to boost the demand for grease due to the benefits they add pertaining to the sustainability of construction machinery. Emphasis on superior infrastructure is a vital strategy in both the developing and the developed world as a strong infrastructure forms the base for complete economic development and high output in public as well as private sectors. Be it the building of bridges, dams, buildings, stadiums, flyovers, railway stations, and shopping malls, heavy investments are being made in all the above, hence, likely to give a push to the development of construction machinery, thus, in turn pushing the grease market growth over the forecast period.
The air travel has been increasing globally on account of growing disposable income which has led to a significant jump in revenues of different stakeholders in the aerospace industry. In addition, there has been a steady increase in defense budget allocation by countries towards strengthening their defense capabilities aimed at mitigating different levels of security threats. The international tourists increased has increased rapidly over the years and thus the production of commercial aircraft is anticipated to increase on account of growing demand for air travel. However, the COVID-19 pandemic has disrupted the industry plans with the overall airlines revenues projected to decline by more than 50%, with recovery to the pre-crisis revenue anticipated in the latter half of the forecast period. This has projected significantly impact the demand for grease in 2020.