Lubes demand peaked in 2012 and the industry must adapt to tougher competition and weaker profits.
As the global lubricants market continues to battle against economic headwinds, demand shrinking in its biggest market after a decade of double digit growth leaves producers facing a "new normal" of growth.
Jeff Ng, ASEAN economist at Standard Chartered Bank, expects growth to slow across Asia from 6.9% in 2015 to 6.8% in 2016 as China "digests prior credit excesses and transition to a new growth model."
Meanwhile, Nie Shichun, deputy general manager for Sinopec Lubricant (Singapore) Ltd, suggests that larger producers are set to increase market share at the expense of smaller, regional players who will find it difficult to compete. "While well established enterprises are expanding their market", Nie says, "small-to-medium sized enterprises are struggling to survive."
China has recently lifted restrictions on import and export of crude, meaning regional producers will now have more international options, however they will struggle to face the marketing budgets and technologies of the big three state-owned majors.