Industry insiders said recently that the impact of the new coronary pneumonia epidemic on global lubricant market demand is almost the same as in the 2008 global financial crisis. However, it is too early to predict the final impact, because it depends on the duration of the epidemic control and economic recovery.

Kenny E. Henderson, President of K&E Petroleum Consulting, said: "Affected by the epidemic, the factory will either shut down or limit production, and the demand for lubricants will be significantly reduced. The impact of the new coronary pneumonia epidemic on demand is still changing, and the severity of the problem will depend on When will the world return to normal."

Ernie Henderson estimates that the demand for lubricating oil in the US may drop by 20% this year. In 2009, the US lubricant market shrank by about 10%. Total demand in 2008 and 2009 fell by about 15%. In March this year, market research company Freedonia predicted that the demand for lubricating oil in the United States will shrink by the same amount as in 2009. A recent report released by IHSMarkit predicts that global lubricant consumption (excluding marine lubricants) will decline by 9.5% this year, while consumption of the global lubricant market fell by 7.2% in 2009. Brazil's Cosan said that in recent weeks, whether in Brazil or other countries where it operates its lubricants business, lubricant sales have fallen by about 50%.

Market analysts and industry insiders agree that the new crown epidemic and the measures taken to control the epidemic are affecting the demand for lubricants. The first is that the home order has drastically reduced personal travel and severely affected the sales of passenger car engine oils, which is the largest demand area in the lubricating oil market; the second is that the closure of auto assembly plants and other companies has greatly reduced manufacturing activities and also reduced The market's demand for industrial lubricants; the third is that air travel has dropped to a fraction of normal levels, greatly reducing the industry's lubricant demand.

IHS predicts that the global demand for non-marine industrial lubricants will drop by only 3% in 2020, while the consumption of non-marine transportation lubricants will drop by 14%. IHS said that due to economic pressure, most car owners postpone the replacement of lubricants, and the decline in consumption of automotive lubricants will be higher than the decline in demand for automotive fuels. Declining demand for finished lubricants will also reduce the consumption of base oils, including APII, II and III base oils.

Analysts said that the area of stable demand is heavy-duty diesel engine lubricants. Stephen Ames, general manager of SBA Consulting, pointed out that the demand for lubricants in key industry supply chains that were still operating during the outbreak remained stable, especially the substantial growth of retail businesses such as Wal-Mart and Costco, let alone Medical supply company. The supply and distribution of many online suppliers also maintained strong demand.

The industry believes that the impact of the epidemic will be negative, but the industry has encountered supply disruptions of this magnitude in the past, such as the collapse of crude oil prices in 1987 and the Asian financial crisis. The impact of the epidemic on the global lubricant market may begin to weaken in the next quarter, but the recovery will not be fast.

Freedonia said: "The worst decline in demand is expected to occur in the second quarter of 2020, and there will be some signs of market recovery in the third quarter. Although it may eventually return to the previous level, it will take time to repair due to economic damage. So the rebound will be slow."

Analysts believe that this crisis may force some refineries to shut down, including some that have base oil production facilities. Ernie Henderson said: "This will benefit the global base oil industry. The industry is still in a state of oversupply. It is expected that M&A activities in the lubricant industry will increase, and some inefficient business sectors will be scaled up and efficient. The higher plate merges."