China Offers Opportunities for PAO

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China Offers Opportunities for PAO
Web server hardware submerged in coolant in operation in a data center. © Sara Guerra Glez / shutterstock.com

SHANGHAI – As China pushes to be a major player in global high-tech industries such as artificial intelligence, polyalphaolefin base stocks have more opportunities in applications like cooling for data centers and electric vehicle engines, speakers said at a lubricants industry summit held here.

PAOs used to be seen as a niche base oil in China largely due to their high price, but this is changing because of their role in applications such as immersion cooling.

“With the fast development of AI, super-sized data centers are in great demand,” Zhang Liang, a technical service manager at Dowpol Chemical, said at the Inter Lubric China summit on June 3. Dowpol is a synthetic lubricants maker based in Shanghai. “How to efficiently cool these energy intensive centers is a big issue.”

Dowpol’s answer is low-viscosity PAOs formulated into coolants for single-phase immersion, as opposed to more expensive double-phase immersion. Both approaches use dielectric fluid to cool data centers and are increasingly adopted globally as the traditional air and water cooling methods are much less efficient.

In 2022, China designated eight hubs across the country to host data centers. These hubs include wealthy areas such as the Hong Kong-Macau-Guangdong greater bay area and Yangtze River delta, as well as less developed areas such as Gansu, Inner Mongolia and Guizhou. Guizhou already has 19 data centers, including the ones that host Apple’s iCloud service for Chinese data.

In Shanghai, part of the Yangtze River delta, the local government aims to add another 170,000 server racks by 2025.

Zhang said there are three major liquids for single phase immersion, but they all have challenges. For example, water-absorbing esters tend to release irreversible acids during hydrolysis, while silicone fluids are more costly and sold only by several American and Japanese companies. PAOs, however, might have compatibility issues with some types of rubber, such as nitrile rubber and fluoro rubber, which are sometimes used in data processors. Dowpol supplies both PAOs and alkylated naphthalenes.

“At Dowpol our solution is to add low-viscosity alkylated naphthalenes,” he said. “This could give the PAO-based fluid better stability and compatibility.” He added that the company recently developed two coolants – Dowsyn DS250 and DowSyn DS300 – and can co-develop customized cooling liquids with clients.

Though the arena is relatively new in China, Dowpol’s cooling fluid business is already facing big rivals, such as Ineos. At the conference, Ineos customer technology service manager Szilard Csihony said the company was optimistic about the Chinese appetite for its ultra low-viscosity PAO, Durasyn.

“China’s determination on fuel economy improvement, the [electric vehicle] market growth and the plan on adding a lot more data centers are all the major reason for us to bring this PAO to China,” he said.

China plans to tighten its Corporate Average Fuel Consumption standard for new energy cars from 5 liters per 100 kilometers to 2 L per 100 km by 2035, according to the Chinese ministry of industry and information technology. New energy vehicles include battery electric vehicles, plug-in hybrid electric vehicles and hybrid electric vehicles, all of which are likely to experience double-digit market growth from 2020 to 2040, according to Kline. As HEV and PHEV still use combustion engines, domestic engine oil demand is forecast to continue growing.

“Low-viscosity PAO is the best solution to achieve high fuel economy efficiency and help cool e-motors,” Csihony said. “Its superior heat management property also makes it ideal for immersion cooling for super computers such as data centers and cryptocurrency mining devices.”

Mainland China bans cryptocurrency trading and mining, but it encourages Hong Kong to make the city a global crypto hub. Hong Kong is about to approve 11 crypto exchanges in the coming months.

Industrial lubes also present other opportunities for synthetics, said Wang Lei, senior consultant at SCI Consulting, a research firm based in Zibo, Shandong province. She said as China is marching towards industry 5.0, which makes humans work side by side with robots and smart devices, demand for smart machines is growing fast. Production value of smart machines rose to ¥3.9 trillion (U.S. $540 billion) in 2023, from ¥1.8 trillion in 2018, according to SCI.

“These machines are more efficient and use less energy,” she said. “They need high quality synthetics to reach their best performance while keeping energy consumption low.” For example, the new generation of gearboxes, which tends to be smaller with higher load capacity and runs faster, would require synthetic gearbox oil to improve its efficiency with superior heat management.

Alina Li, senior engineer at ExxonMobil Asia R&D, agreed. She claimed the company’s lab test showed that its metallocene PAO fluid lowered a gearbox’s temperature by 13 degrees Celsius, while a mineral oil alternative lowered the temperature only a little.

Foreign companies like ExxonMobil so far are the main suppliers of synthetic oils in China, but Chinese companies including Sinopec, China National Petroleum Corp., Tongyi and the coal-to-liquids PAO supplier Taihang are entering the market, said SCI’s Wang. While oil quality is always important to attract new clients, Wang noted that companies also need to invest in aftermarket development.

For example, suppliers can gain advantage by building a professional team that understands each potential client’s needs. Wang said this could involve asking questions about topics such as cost-sensitivity, impediments to changing oil suppliers, challenges faced in the industry and how SCI’s oil can help a client stay competitive. “Questions like these could help develop new clients,” she said.

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