According to the Cleveland-based industry research firm, process oils and metalworking fluids used in manufacturing applications will see the most growth through 2020. Process oils will grow at 0.7 percent annually to 451 million gallons and metalworking fluids will grow 1 percent per year to 150 million gallons.

The expansion will be modest, mentioned Cline, since the U.S. is already a mature market for the consumption of these lubes. Globally, new manufacturing capacity is mainly being created in developing countries close to rapidly expanding markets, such as China.

The increased manufacturing output will also allow the grease market to expand. Greases are included in the studys Other Lubricants category, which will have an estimated demand of 236 million gallons by 2020, representing 0.3 percent growth per year. The positive outlook for transportation equipment manufacturing will allow grease demand to continue growing, she said.

Engine oils and transmission fluids will see moderate increase in demand through 2020, to 1.1 billion and 449 million gallons, respectively. Higher drain intervals in improved formulations of these lubes, as well as in metalworking and hydraulic fluids, will put more focus on premium products such as synthetics as the industry becomes more value-driven than volume-driven, the study noted.

Synthetic lubes are more expensive up front, but some equipment owners choose them over [conventional] petroleum-based products in order to reduce long-term maintenance costs and improve performance, Cline explained. Synthetics perform well at low temperatures due to their high viscosity indices, and they resist thermal and mechanical breakdown under severe operating conditions better than conventional petroleum lubricants.

There will also be an increased demand for rerefined and biobased lubricants due to both government regulations and economic incentives to purchase these products. Cline said that demand for rerefined lubricants in 2015 was approximately 185 million gallons and is forecast to grow over 4 percent per year, while biobased lubricant demand was around 35 million gallons last year, and is expected to have a 5 percent annual growth.

Biobased and rerefined products have plenty of room for growth as they expand into more product areas, she said. Although low oil prices have altered the short-term forecast for both these types of lubricants, the study forecasts that demand will return in the long-term as oil prices recover.

Source: The Freedonia Group Inc.

The 380-page study, titled Lubricants, is $5,400 from Cleveland-based Freedonia Group. For more information, visit www.freedoniagroup.com.