Sri Lanka Demand Shrank in 2018 BY K. VENKATESHWAR RAO
Lubricant demand volumes
in Sri Lanka shrank 0.3 percent in 2018, while the sales value of those
products rose 3.1 percent, according to a market report released recently by
the industry’s regulator, the Public Utilities Commission of Sri Lanka.
The country consumed
57,794 metric tons of finished lubes valued at 27.3 million Sri Lankan rupees
(U.S. $152,000) last year, compared to 57,990 tons and Rs 26.5 million in 2017.
Chevron Ceylon Ltd.
remained the market leader, but its share of sales declined 2.5 percent to
21,571 tons, or 37 percent of demand. Its nearest competitor again was Lanka IOC –
local subsidiary of Indian Oil Corp. Ltd. –
whose share swelled 0.5 percent to 10,176 tons, or 17.6 percent. Laugfs
Holdings Ltd. was third at 5,193 tons for 9 percent, up from
7.7 percent in 2017.
Automotive lubricants
accounted for 74 percent of demand, and sales of that category rose 1 percent
during 2018. Industrial lubricants constituted 16 percent of demand and marine
lubricants 6 percent, the report said, and demand for industrial lubes, marine
lubes and greases fell 2 percent, 8 percent and 1 percent, respectively.
A total of 23,649 tons of
lubes were imported to the country, while the country exported 3,995 tons. A
combined 39,688 tons were produced at domestic blending plants, the report said
– 62 percent by Chevron Ceylon, 25 percent by Lanka IOC and 12 pecent by Laugfs.
The commission’s director
for corporate communications, Jayant Herat, noted that lubricant demand fell
despite a 6 percent increase in the nation’s vehicle fleet in 2018.
“Generally, there is a
proportional relationship between the vehicle population and the automotive
lubricant sales volume,” he said. “However, the introduction of high-mileage
lubricants to the market and gradual growth in the market share of a new
generation [held automotive lube demand] to growth of 1 percent.”
Herath did not rule out
the possibility of gray market sales impacting the results in the commission’s
report. He noted that Sri Lanka’s Consumer Affairs Authority is drafting rules
to regulate substandard lubricants, along with other products.
Laugfs CEO Niroshan
Laugfs blamed the decline in lubricant demand on a slowdown in Sri Lanka’s
economy and the rupee’s devaluation against the dollar. The national government
raised duties on imported vehicles, which caused those imports to fall, and
this also affected lube demand, he said.
An official at Lanka IOC,
who asked not to be identified, said the company increased market share by
obtaining original equipment manufacturer lubricant approvals and by
introducing products with longer drain intervals. He noted that local lubricant
prices have risen but said those increases have not kept pace with the rupee’s
devaluation so that real profits shrank.
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