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Heavy-duty diesel vehicles In the heavy-duty diesel vehicle market, 65% of the 3.7 million trucks on Russia’s roads are over 10 years old and 96% of them run on diesel fuel. This is still very much a local market, with 80% of the fleet being domestic OEM brands. Together, the top three Russian manufacturers, KAMAZ, GAZ and ZIL hold almost 60% of the market – the most popular foreign OEM, Volvo, accounts for just 2%. However, some Russian manufacturers are using foreign engines, for example Cummins, inside some of their vehicles, which means they require OEM lubricant approvals.
From 2013-2015, there has been a decline in the production of heavy-duty vehicles, but now government support has bucked this trend, with a 31% increase in production reported in 2016. Just as was observed in the passenger car market, exports of heavy-duty vehicles produced in Russia have declined in recent years – down 28.5% in 2016 compared to 2015.
Emissions in Russia Russia has adopted European emissions standards for on-road vehicles. In January 2016, Euro 5/V requirements became mandatory for all vehicles, both locally manufactured and imported.
Clearly, there is quite a misalignment in vehicle emissions requirements and the availability of suitable fuels. For example, there is still a significant consumption of GOST (Euro-0) fuels, even by passenger cars, and it is estimated that < 0.2% of gasoline and < 1.2% of diesel passenger cars run on Euro-6 fuels.
One alternative to diesel and gasoline is compressed natural gas (CNG). There are already around 200 auto gas stations in Russia and 44 new filling points were added in 2016.
The natural gas vehicles fleet in Russia in 2015 is around 111,000 units. However, government support for alternative fuels, which includes subsidising CNG vehicle purchases (taxies, buses and machinery for housing and communal services) and the construction of CNG filling stations, means sales are likely to grow. This will be supported by the fact that 50% of public transport and municipal vehicles are expected to be powered by natural gas by 2020.
Lubricant markets With the exception of 2015, the Russian passenger car motor oil (PCMO) market
24 Chart 2. PCMO consumption by viscosity grades, %
The Russian heavy-duty engine oil (HDEO) market depends on economic and political conditions. In 2014 and 2015 sanctions forced a number of logistics companies to re-register their business outside of Russia or to close entirely. This is reflected in a drop in consumption in those years, although a recovery is expected in the next five years. As observed in the PCMO market, there is a decrease of mineral oil and increase of synthetic oil use, with the share of synthetic engine oil expected to reach 50% by 2025.
The high volume of domestic vehicles means monograde GOST still accounts for more than 40% of the HDEO market – although we see SAE 15W-40 gaining popularity as a higher quality, affordable alternative.
Improving lubricant quality in Russia means an increased demand for higher quality base stocks. This is reflected in a number of Russian Group I plant closures, which have taken 695 KT/y of Group I capacity out of the market. At the same
LUBE MAGAZINE NO.142 DECEMBER 2017
has grown steadily. Going forward we see 2.5-3% growth every year to 2021. Clear quality upgrade trends have been seen with a significant decrease of mineral oil and increase of synthetic oil use. This growth of synthetic lubricant consumption is aligned to the popularity of foreign brand passenger cars – with more than 88% of the foreign passenger car OEMs recommending synthetic lubricants in 2016 vs. 49% of domestic OEMs.
API claims are predominant in the Russian market, with API SL/SM/SN most popular for foreign brand cars and API SJ/SL for domestic vehicles. In terms of viscosity grade, SAE 10W-40 and SAE 5W-30 account for more than 60% of the market.
time, there have already been Group II and III capacity increases – with more from Rosneft and Gazpromneft expected to add over 400 KT/y of Group II and 161 KT/y of Group III capacity in the coming years. However, despite increased production capacity, in the near term Russia will still need to meet its Group II and III supply-demand gap via imports.
Chart 3. HDEO consumption by viscosity grades, %
Market opportunities Clearly the Russian market presents a number of opportunities and challenges.
The evolution of the market will continue to drive up lubricant quality, which will impact oil marketers, OEMs and base stock suppliers. Infineum will continue to work with all these stakeholders to provide the most appropriate solutions for the Russian market.
This article was first published in Infineum International Limited ‘Insight’ magazine.
LINK
www.infineuminsight.com
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