Top Ten Trends of China's Lubricant Industry in 2012

First, the commercial vehicle IV standard dust settled CH-4 became the main market this year

Occurrence probability: 95%

In last year's "Top Ten Conjectures of China's Lubricants Industry in 2011", the author once predicted that the commercial vehicle IV standard will be "a bright future and a tortuous road." Sure enough, it was originally scheduled for January 1, 2012. At the onset of the implementation of the National IV standard, we once again saw a notice of delay in implementation. However, this time it is necessary to “realize the truth”.

On January 10, the Ministry of Environmental Protection issued an announcement stating that, starting from July 1, 2013, all production, import, sales, and registration of vehicle compression ignition engines and vehicles must meet the requirements of the National IV standard. In addition, the Beijing Municipal Environmental Protection Bureau also announced recently that Beijing will take the lead in implementing national V motor vehicle emission standards in China, and the timetable will be determined in the second half of this year.

The reason why this time is "reality" is because the Beijing PM2.5 pollution incident that sparked an uproar on Weibo since the end of last year. The Beijing air pollution index released by the U.S. Embassy gave the people the first awareness. Due to the "culprit" which caused serious deterioration of air quality in many cities in recent years - this kind of pollutants called PM2.5, and the full implementation of the National IV standard will be an important means of effective control of PM2.5 pollution.

Nitrogen oxides are gases that are closely related to the fine particulate matter (PM2.5) that causes ash in the urban atmosphere. The implementation of the National IV standard will reduce the emission of nitrogen oxides by nearly 50%, and thus effectively reduce PM2.5 emissions. Pollution.

For the lubricating oil industry, the implementation of the commercial vehicle IV standard next year means that the CH-4 grade diesel engine oil that meets the national III standard will become the major market sales product for major brands this year; while the CF-4 is one level lower. Diesel engine oil is expected to see a significant decline in overall sales within the industry this year. After the second half of next year, with the full implementation of the National IV standard, the CI-4 diesel engine oil, which is the lowest engine oil configuration for the China IV commercial vehicle, will usher in an explosive sales explosion.

Second, the international situation is turbulent

Occurrence probability: 90%

In 2012, from the perspective of the global market, the two major hotspots affecting international oil prices will be the Iranian war crisis and the European debt crisis. Once the former detonates, it will cause the international oil price to soar by more than 50%, while the latter will drag down the price of oil. major factor. Judging from the current market evolution, because the U.S. economy has recovered relatively quickly and has reduced the impact of the European debt crisis on the global economy, the Iranian war crisis will be the main external factor affecting the trend of international oil prices this year. Therefore, the price of lubricant oil is also And there is a possibility of skyrocketing.

At present, because the United States, Israel, Iran, and other relevant countries are afraid to act rashly, because the interests of all parties are intrinsically irreconcilable, the risk of war in the Gulf region will increase as time goes on. The Syrian crisis The evolution may also have an impact on the situation in Iran.

Third, passenger car, commercial vehicle fuel consumption standards to implement energy-efficient oil usher in a larger market space

Occurrence probability: 65%

From January 1st this year, two national standards, "Method and Index for Fuel Consumption of Passenger Vehicles" and "Measurement Method for Fuel Consumption of Commercial Vehicles," have been formally implemented. These two standards can be said to be worn by auto companies. An energy-saving “sweeping spell”.

The third stage of the fuel limit standard for passenger vehicles that was drafted and discussed in 2009 was not a simple upgrade of the first two stages, but was completely updated from the evaluation system to the evaluation indicators. This standard refers to the United States’ company. The "Average Fuel Economy Law" incorporates the production of all vehicle models produced by car makers into the overall assessment scope. As a national mandatory standard, the goal is to reduce the fuel consumption limit of vehicle companies by 20% compared with the second phase. By 2015, the national average fuel consumption of passenger vehicles will drop to about 7 liters per 100 kilometers.

In order to achieve this goal, passenger car manufacturers must make every effort to reduce fuel consumption in the coming years. Under this background, SN/GF-5 engine oils with more fuel-efficient performance will usher in more market development space. In last year's "Ten Conjectures", the author once predicted the emergence of SN oil. Sure enough, during the year, new products such as "Dragon High-end SN" and "Mobil SN No. 1" all sparked enthusiastic enthusiasm in the market. Repercussions; It is expected that in 2012, SN oil products will be expected to achieve breakthroughs in the field of loading and after-sales service of depots.

Fourth, the lubricant industry "Made in China" to the world

Occurrence probability: 40%

"Made in China" has gone global in all walks of life, but it is still lacking in the lube industry. In 2012, this situation will achieve a major breakthrough. The Sinopec Singapore Lubricant Project, which will invest 580 million yuan, will have production conditions at the end of October this year, with a production capacity of 100,000 tons/year. This will mark the first time that Chinese companies have begun setting up factories overseas to produce lubricants.

Actually, at present, there are already some lubricant products produced in overseas OEMs in the domestic market, such as SPEED oil products originating from the United States. The domestic “Shellac” net windshield cleaner has also successfully entered the UN peacekeeping force. Military supplies supply system. However, as a whole, if domestic lubricant companies want to enter the overseas market on a large scale, they are still subject to the country's relevant policy restrictions. Under the current licensing system, only monopoly state-owned enterprises have the ability to directly export lubricating oil products. To truly realize the “hundred flowers” ​​of China’s lubricating oil exports, it is necessary to further loosen the relevant national policies.

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V. The change of industry structure leading private enterprises will suddenly rise

Occurrence probability: 50%

China's lubricant industry has long maintained the pattern of “three points of the world” for state-owned, foreign, and private-owned brands. Among them, the unified lubricants joint venture has a certain lineage in the entire industry because of its “pedigree” of former “private bosses”. A unique position. However, over the five years since the joint venture, with the change in the positioning of Shell in China, the ambiguity of the “unique” status of unified lubricants has become increasingly apparent. On January 31, Li Jia, general manager of unified lubricants, officially left the company. The news immediately became the headline on the industry website. After Li Jia left, the original DuPont application surface material general manager Chen Cuiwei took over as general manager. The unification, the future trend and the impact on the changes in the domestic lubricants structure will be of concern.

As a private enterprise, one of the “three poles” of the Chinese lubricating oil industry, after more than ten years of competition, it is becoming increasingly mature. Several privately-owned lubricants companies that adhere to the brand's operational ideas in the market have standardized market protection, improved after-sales services, and reliable product quality. They are getting more and more favored by dealers and consumers at all levels.

6. More lubricant companies join hands with the capital market

Occurrence probability: 45%

On April 20th, 2011, the application for the first meeting of the domestic first-time listed lubricants company --- Gaoke Petrochemicals was denied, and it was declared that the domestic lubricants company's first impact on the capital market ended in failure.

On December 15 last year, "Jinling Evening News" titled "The Reason Why Jiangsu's New Shares Chongguan Passed Exposure," and introduced the reason why the "Lubricants Listed in the First Warriors" failed: Internal data of the China Securities Regulatory Commission showed that If petrochemicals are to be rejected, the main problem lies in the risk of raw material supply. As its main raw material base oil accounts for approximately 90% of the company's production costs, the prices of raw material base oil and finished product lubricants fluctuate along with the international crude oil price changes. According to the sensitivity analysis of the disclosure of the application materials, for every 1% increase in base oil purchase price in 2010, gross profit decreased by 6.58%, and total profit decreased by 14.08%. Compared with other companies in the same industry, the ability to resist risks is not strong. Moreover, Gaoke Petrochemical did not fully disclose the effective measures to deal with the risk of raw material price fluctuations in the application materials.

The failure of the high-tech Petrochemical sprint listing did not prevent other companies from "marriage" capital and enthusiasm toward the listing. According to the author's knowledge, at least three lubricant companies in the industry are still busy preparing for listing. However, since the second half of 2011, the Shanghai and Shenzhen stock markets have cooled sharply, capital markets have been caught in the “winter season”, and the risk of fluctuations in base oil prices has been particularly prominent this year. Therefore, whether these listed companies can successfully counteract this year and avoid It is indeed not optimistic to follow the "overhaul" of Gaoke Petrochemical. According to the “Basic Information Form for the Enterprise’s Initial Public Offering of Stocks issued by the Issuance Supervision Department” announced on the website of the China Securities Regulatory Commission on February 1, none of the 495 companies currently waiting in line for listing is a lubricant company.

Of course, in the long run, by 2014, domestic lubricant companies will usher in a wave of more suitable time-to-market windows. There are three main reasons for this, one is that Sinopec's Great Wall Lubricants may spin off the listing, the second is the sharp increase in domestic and Asia Pacific base oil capacity supply, and the third is the resolution of the Middle East war crisis.

Fu Chengyu, the current head of Sinopec, had previously successfully promoted several companies such as COSL, China Chemicals, and CNOOC in Hong Kong and Shanghai during his tenure as CNOOC’s general manager. COSL’s selection into Standard & Poor's “Global The most investment worth 30 stocks." Therefore, the splitting of Sinopec Corp. into listings and embodying the maximization of the group’s interests is naturally a matter for the title of “Fu Dangjia” after taking office.

According to the report issued by CLSA’s opinion not long ago quoted by CLSA’s management, Sinopec is currently considering a reorganization of the Group, including the spin-off of its five oilfield engineering services and lubricants businesses to reflect its true asset value.

Sinopec Great Wall Lubricating Oil's current annual production is close to 1.6 million tons, and its market share in China is about 30% to 40%. If the market price is 15 times P/E, the market value after listing will reach about 30 billion yuan. The successful listing of Great Wall Lubricants will pave the way for follow-up listing applications of domestic lubricants companies.

In addition, the substantial growth in the supply capacity of the Asia-Pacific region and domestic base oil in the coming years will effectively alleviate the impact of fluctuations in base oil prices on the profits of lubricant companies. Shell's annual production of 1.5 million tons of GTL base oil project in Qatar was officially put into operation at the beginning of this year. In June, South Korea's SK Lubricants will build a new three-group base oil installation in Asia, together with CNOOC and Hainan’s sunshine in China. The upgrading of the base oil installations is expected to reduce the supply of domestic base oils by early 2013, and the question of raw material supply questioned by members of the PIC will be resolved.

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Seventh, network sales continue to grow rapidly

Occurrence probability: 80%

In last year's "Ten Conjectures", the author once pointed out the trend of "sale of engine oil on the Internet to become trendy". Today, this wave of e-commerce has been "blown" to the auto parts industry. On January 11, the world-famous Bosch Group, an automotive technology and service provider, formally launched its official online trading platform for auto parts products at Taobao Mall, the official flagship store of Bosch Auto Parts.

This is the first auto parts supplier to break into the online shopping field following the launch of online shopping sales models of Great Wall, Longxi, Chery, Geely, Skoda and many other lubricants and vehicle brands. At this point, with the exception of tire companies, the company's flagship stores in various segments of the industry have already achieved "reunion" in the field of e-commerce.

In 2012, I expect the network sales of lubricating oil products, especially the network sales of synthetic SN and SM steam engine oils, will still maintain a growth rate of over 200%. The biggest beneficiaries of this trend will be the end consumer groups of the majority of private car users. However, with the continuous expansion of online sales, the contradiction between manufacturers and traditional channel distributors will gradually become prominent. How to consider tailoring a special product line for e-commerce channels to resolve the contradiction between online sales and traditional channel sales? It will be a subject that the industry's "first movers" will need to tackle in the future.

VIII. Green Marketing Becomes Future Development Trend

Occurrence probability: 50%

What is "green marketing"? According to the definition of Wikipedia, green marketing refers to the consumption habits of companies in order to cater to consumers' green consumption. Green environmentalism is taken as the value orientation of the company’s production products, and green culture is its production concept. It strives to satisfy consumers’ demand for green products. The marketing activities are done.

In fact, from the perspective of the history of the development of foreign companies, the earliest proposed "green marketing" concept is also Chevron, DuPont and other petrochemical companies. In China's lubricants industry, Shell's environmental protection awareness program for elementary and middle school students, "Medical Action" has now been carried out in 18 cities including Beijing, Tianjin, Shanghai, and Guangzhou, and has involved more than one million students. The first domestic company to join the United Nations "Global Compact" charity organization, Long Yao Petrochemical, has also submitted the "Global Compact Performance Progress Report" in the Chinese and English versions to the United Nations for two consecutive years.

From the perspective of lubricant oil as an industry attribute of petroleum products, the non-renewability of petroleum resources and the sensitivity to environmental impacts during use have all determined that this industry should be a corporate social responsibility and “green marketing”. Closely related industries, in-depth development of green marketing, also reflects the deep connotation of the value of corporate brand development for the society. We have reason to believe that with more and more lubricant companies embarking on the road to brand development, "green marketing" will become the mainstream trend of the development of the leading companies in the future of China's lubricant industry.

Nine, brand promotion set off "microblogging war"

Occurrence probability: 30%

As the author said in last year's "Ten Conjectures", as consumers become more and more savvy and the concentration of media concentration, domestic industries have already passed the stage relying on CCTV advertising and branding. From the propaganda of major brands last year, the author believes that the "CCTV advertising war" with a low probability of occurrence does not appear.

At present, the most popular media in the country is undoubtedly Sina Weibo. Weibo marketing, as a new brand promotion model, has also been increasingly used. Many domestic lubricant companies now have their own official microblogs on Sina. Therefore, following the launch of Taobao in 2011 and the launch of online sales, the new round of online advertising competition for lubricant brands in 2012 will likely be on Weibo. Occurred on this platform.

Ten, more brands began to pay attention to the interests of dealers

Occurrence probability: 55%

In 2011, affected by the sluggish growth of the domestic auto industry, the growth of domestic lubricant sales slowed down, and the interests of distributors of many brands were even more severely squeezed. However, at present, many brands in the lubricants industry are only paying attention to the expansion of their own market share and the growth of sales volume. They have neglected the profits of distributors. In this process, the secondary channels of the repair shop became the biggest beneficiaries of the competition for each brand, and in the competition among various brand distributors, the appetites of the secondary channels were increasingly favored and earned. Take a high level of profit that is not equal to its own sales level. In order to expand the sales volume, dealers only continuously carry out a series of activities such as promotion, gift delivery and the like to lower-level customers. The sales force is getting bigger and bigger, and eventually they constantly reduce their profit margins, in the manufacturers and markets. Under the pressure from both sides, the profit margin was continuously weakened, which ultimately had an adverse effect on the overall development of the industry.

In the current situation, in order to maintain a sound and healthy development of the domestic lubricants industry, we must always pay attention to dealers' legitimate interests in the areas of exclusive distribution, anti-dumping and year-end discounting, and ensure the reasonableness of customers. Benefits are a heavy responsibility on their shoulders. Lubricant brands that can do this will achieve the most rapid development in 2012.