Market Trends of Jordan Lubricants Industry
Engine Oil is Expected to Dominate the Market
- Engine oils, essential for lubricating internal combustion engines, typically consist of 80-85% base oils and 15% to 20% additives.
- Engine oil, a pivotal lubricant in the combustion cycle, comprises two main components: base stock and additives. Primarily, engine oils lubricate parts to mitigate friction.
- These oils are crucial for reducing wear, preventing corrosion, and ensuring easy operation of engine parts. By forming a thin film between moving parts, engine oils enhance heat transfer and reduce tension during contact.
- The light motor vehicle segment leads in engine oil consumption among all segments. Technological advancements and government mandates for fuel economy have driven automakers to produce lighter vehicles with tighter tolerances, enhancing durability.
- As the economy recovers, automotive sales are projected to see moderate growth in the coming years. This anticipated rise in automotive sales is set to fuel moderate growth in the automotive lubricant market.
- The data from the Jordan Free Zones Investors Association highlighted that in 2023, Jordan witnessed an 8.8% Y-o-Y increase in new light vehicle sales, totaling 37,587 vehicles. Furthermore, by January 2024, Jordan re-exported 3,911 vehicles, a 32% rise from 2,941 vehicles in the same timeframe the previous year. This surge underscores the Jordanian market's adaptability to global automotive industry shifts and foreign demand.
- Given the surging demand for two-wheeler and three-wheeler vehicles in Jordan, automotive firms are expanding their presence through showrooms and distribution points, boosting engine oil consumption in these segments.
- Additionally, with the private sector rebounding and OEMs like Hyundai and Toyota re-entering the market, there's a notable uptick in automotive sales and engine oil demand.
- Increasing demand for medium-duty trucks, including utility, courier, and package delivery trucks, ambulances, shuttle buses, school buses, and recreational vehicles in Jordan stimulated the market growth of lubricants.
- Moreover, strategic developments in Jordan's automotive sector further bolster the lubricants market. For instance, in June 2024, MG Motor signed a partnership in Jordan with GKS Auto, a subsidiary of the prominent GB Corp. This alliance is poised to introduce unparalleled innovation and service excellence to the Jordanian automotive landscape.
- Therefore, the factors above are expected to boost the consumption of engine oils in different sectors.
Understand The Key Trends Shaping This Market
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Power Generation Segment Anticipated to Experience Rapid Growth
- Lubricants are used in different power generation sectors, including wind energy, hydropower, and thermal power plants.
- Lubricants reduce friction between moving parts like bearings, gears, and turbines, preventing wear and tear and extending equipment lifespan.
- Furthermore, lubricants shield equipment from corrosion, which can arise from moisture, humidity, or chemical reactions, thereby preventing equipment failure and enhancing longevity.
- Factors such as rising electricity output driven by oil sector demands, population growth, and enhancements in generation capacity and transmission networks are influencing market dynamics.
- Additionally, the expanding power generation sector and rising energy consumption are poised to influence market growth. Nearly 94% of Jordan's electricity is generated from oil and natural gas. NEPCO (National Electric Power Company) reports a consistent rise in electricity consumption, with a notable 5.7% increase in 2022.
- As per the data from the International Renewable Energy Agency (IRENA), Jordan's solar energy capacity surged to 2.7 GW in 2023, up from 1.7 GW in 2020, marking a significant leap and aiming to lessen reliance on imported fossil fuels.
- Moreover, the first quarter of 2024 witnessed a surge in investor applications for power and renewable energy projects in Jordan, more than doubling from the previous year. As per the data from Jordan’s Energy and Minerals Regulatory Commission (EMRC), energy project license applications soared from 75 in Q1 2023 to 166 in Q1 2024.
- Given these trends, lubricant consumption in Jordan's power generation sector is poised for an uptick in the coming years.
