LOCAL REPORT Brazil
Marcelo Guimarães, Executive Manager, Fernanda Ribeiro, Product Manager and Thiago Junqueira, Market Intelligence Manager, ICONIC Base Oil
Being the sixth largest lubricant market in the world, with a volume size of approximately 1.35 billion litres or 8.5 million barrels, Brazil reached approximately 5% volume growth in the last year, the highest growth since the severe impact of the COVID-19 pandemic. Its figures match closely to market volumes pre-pandemic.
The reduction in political uncertainties, continuous growth in agriculture production, and the automotive market recovery were levers for the resumption of volume and profitability, which are good winds expected to continue in the next three years. ICONIC’s forecast is that the market will continue to grow at an average rate of 2.4%, as it did in 2023.
Brazil’s lubricant business is undergoing transformation, demand for premium products, driven by a highly efficient low-carbon economy, and the advent of electrification are no longer a trend but a potential reality. As in other markets, there is a significant correlation with the sale of diesel and gasoline for automotive lubricants and with Industrial GDP, for Industrial lubricants.
Companies that managed to build a strategic raw material and finished fluid supply with trusted partners in this period differentiated themselves through efficiency, flexibility, and reliability to their customers, which is in a nutshell, readiness to embark on this period of expected growth.
Growing demand for premium base oils Due to the scarcity of refineries within Latin America, Brazil is a net importer of Base Oils. It is estimated that 50% of the base oil was of imported origin, 60% being Group II and Group III. The volume has seen linear growth every quarter over the last two years.
Demand for Group II Base Oil is expected to grow at a compound annual growth rate (CAGR) of 6.3% and Group III at 4.8%, according to an estimate adopted by Iconic Base Oil.
The volume sold to the market of high-quality oils needed to meet the requirements of modern engines is not yet compatible with the number of new vehicles on the market, and this is expected to change. The important thing is that the lubricant supply chain in Brazil has all the necessary resources to support this movement, such as additive technology and the availability of quality base oils.
ICE technology resilience
Brazil is a few steps ahead in the use of renewables at both the energy and electrical matrix when compared to other markets. For example, the Renewable Energy Matrix accounts for 48% over 15% from a Global Perspective. The same happens to the Electricity Matrix which shows a content of 83% of Renewables versus 17% in a Global Average.
The paramount role of the regulatory agency One of the advantages that needs to be highlighted in the Brazilian market is the preponderant role of the regulatory agent – ANP – National Petroleum Agency.
Its regulatory and educational activities include the rules that need to be adopted for those who want to step into the lubricant business, such as adherence to a lubricant producer or importer registration, which includes audits at the plant, and the need to register all automotive products and some types of industrial lubricants.
Considering all the elements above, we can say that the Brazilian lubricant market is a stable, prepared market, with good opportunities for those thinking about diversifying their business on a global level.
You can read the unabridged Brazil local market report from ICONIC at
https://www.lube-media. com/digital-exclusives/
https://iconic.com.br/
LUBE MAGAZINE NO.179 FEBRUARY 2024
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