Market Trends of Iraq Lubricants Industry
Engine Oil is Expected to Dominate the Market
- Engine oils are widely used to lubricate internal combustion engines and generally comprise 75-90% base oils and 10-25% additives. Engine oil, comprising base stock and additives, is a crucial lubricant in the combustion cycle. It reduces friction between engine parts, ensuring smooth operation.
- Engine oil creates a protective layer that minimizes friction and improves heat transfer. Its applications include automotive, power generation, and heavy-duty equipment.
- Engine oils are typically used to reduce wear, protect against corrosion, and ensure the smooth operation of engine internals. They create a thin film between moving parts to improve heat transfer and reduce friction during contact.
- It acts as a coolant for engine parts, dissipating heat generated by combustion and friction. This heat management enhances the engine's lifespan and efficiency.
- Fuel combustion in engine parts produces corrosive acids. To combat this, engine oils are fortified with additives like corrosion inhibitors. However, with time, direct exposure to oxygen can cause the oil to oxidize, diminishing its corrosion-fighting abilities and necessitating regular oil changes.
- Considering the growing demand for two-wheeler and three-wheeler vehicles in Iraq, various automotive firms are increasing their footprints in the country through showrooms, distribution points, and others, further enhancing engine oil consumption from these automotive segments.
- Moreover, the country's recovering private sector and many OEMs, such as Hyundai and Toyota, are returning to the market with increasing automotive sales, thereby enhancing the demand for engine oils in the country.
- In September 2023, Motul, a global leader in engine oil production, introduced its NGEN line in the Middle East. This series, tailored for hybrid cars and motorcycles, features bio-sourced and premium regenerated base oils. Motul enhances its sustainability and significantly reduces carbon emissions by pivoting to renewable sources.
- Therefore, the factors above are expected to boost the consumption of engine oils in different sectors of Iraq.
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The Automotive and Transportation Segment is Expected to Dominate the Market
- In the automotive segment, various lubricants, such as engines, transmissions, hydraulics, greases, and other lubricants, are used in commercial vehicles and motorcycles, which will drive the Iraq lubricants industry.
- Improved engine designs for achieving enhanced performance and efficiency and meeting the environmental emission regulations are expected to boost the Iraqi lubricants market.
- Increasing demand for medium-duty trucks, including utility, courier, and package delivery trucks, ambulances, shuttle buses, school buses, and recreational vehicles in Iraq stimulated the market growth of lubricants.
- The year 2023 was crucial as the Saudi Investment Company and Mercedes signed an MoU, indicating Mercedes' plan to establish a local car manufacturing plant. This strategic partnership will drive the country's demand for automotive lubricants.
- According to the Government of Iraq, Iraqi car sales reached 127,749 units, registering a growth of around 18.4% compared to the previous year.
- In aviation, engine oils provide lubrication, corrosion protection, cleaning, cooling, and noise reduction and are used in pistons, gears, bearings, and valves.
- In April 2024, the United States approved a USD 140 million deal to enhance Iraq's air capabilities. This contract, sanctioned by the State Department, specifically targets bolstering maintenance and training support for Iraq's C-172 and AC/RC-208 aircraft, highlighting the deepening relationship between the two nations.
- Furthering its defense capabilities, the United States government inked a USD 3.2 billion deal with Dassault Aviation to purchase 14 Rafale aircraft, signaling potential market opportunities.
- In the marine industry, hydraulic oils are used in steering systems, thrusters, and anchor windlasses. They are often biodegradable and efficient in cold temperatures.
- Marine gear oils, primarily mineral-based, are used in marine transmissions and outboard gear cases. Marine greases prevent rust and protect against salt damage.
- Shifting the focus to the maritime sector, the nation boasts six ports, three of which feature oil terminals. Notable ports include Al Basrah, Al-Basra Oil Terminal, Khawr Al Amaya, Khawr Al Zubair, and Umm Qasr. Moreover, a new port, the Grand Faw Port, is slated to commence operations in 2025. This development is expected to ramp up MRO activities, boosting the lubricants market.
- Therefore, these trends are expected to propel the consumption of lubricants in the country's automotive and transportation segments.
