Opportunities Remain in Flat U.S. Industrial Market

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U.S. demand volume for industrial oils and fluids is forecast to decrease by a compound annual rate of 0.3 percent out to 2023, but demand is rising for synthetic lubes and products used in select industry sectors, according to a Kline & Co. study.

“Despite that, we do see penetration of synthetics in the industrial sector growing from about 22 percent in 2018 to 23 percent by 2023,” George Morvey, industry manager for Kline’s energy practice, said during a webinar on Dec. 11.

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Not including process oils, Kline estimated U.S. industrial oils and fluid demand at 2.4 million metric tons in 2018.

Rubber and plastic products together was by far the leading sector, accounting for about 20 percent of industrial oils and fluids demand in 2019. It was followed by the electrical equipment and energy transmission sector, and by the chemicals sector.

Kline flagged five sectors as poised for growth: rubber and plastic products; agriculture, forestry and fishing; food processing; oil and gas extraction; and marine. “Players in the U.S. market should be looking at and understanding these, and making sure that their product portfolio offering and expertise aligns with the products that these industries consume,” Morvey said.

He noted that four other sectors, while not going away, are showing little to no volumetric growth: mining, printing, wood and paper products and transportation equipment manufacturing, which is impacted by the global decline in passenger vehicle production.

Morvey noted it’s important to look at industrial oils and fluids at the product level as well. He highlighted demand for natural gas engine oil.

“This is a growing category, especially in the power generation sector, as more and more [electricity providers] switch from coal-fired to natural gas-fired plants, that will have a positive pull-through effect for demand for natural gas engine oils,” Morvey said.

Stationary diesel engine oil is also in demand in the oil and gas extraction industry, he said, most notably for fracking and drilling operations.

Kline found that synthetics accounted for 55 percent of refrigeration oil demand in the U.S. in 2018 and conventional oils accounted for 45 percent. Synthetics accounted for 43 percent of compressor oil demand in the U.S., the company found, with conventional products accounting for 52 percent and semi-synthetics accounting for 5 percent.

The company found conventional products accounted for the vast majority of industrial engine oil demand and remained dominant — more than 50 percent of demand — in product categories such as hydraulic fluids, grease and in the combined turbine and circulating oils category.

Kline projects that global demand for industrial oils and fluids will grow by a compound annual rate of 0.65 percent from 12.1 million tons in 2018 to 12.5 million tons in 2023. “However, synthetics will reach 18 percent of total demand by 2023, up from 15 percent in 2018,” Morvey said.

The webinar was based on Kline’s study, “Global Lubricants: Market Analysis and Opportunities.”