Asia-Pacific is the largest regional market for industrial oils and greases and will experience the highest growth in demand for turbine and circulating oils over the next five years, according to a report from Kline & Co.
The regions hefty status in the market is due largely to its manufacturing and mining industries, said Kunal Mahajan, Klines project manager for energy, in a webinar on Sept. 23. The global consulting and research firm estimates that hydraulic fluids account for more than half of global demand for industrial lubricants. Large quantities of hydraulic fluids are consumed in manufacturing and mining, and Asia-Pacific leads the world in both industries. The region is responsible for around 40 percent of global demand for all industrial oils and greases.
The key country markets in Asia are China, India, Japan and South Korea, where demand is mainly being driven by economic growth. For example, consumers rising income and changing lifestyles are increasing demand for packaged foods, leading to growth in the food processing industry, said Mahajan. Refrigeration oil is expected to be the second fastest growing global category of industrial oils through 2019.
However, the study indicates that a trend toward consolidation in the global food and beverage industry may lead to slower growth in demand as unproductive plants are closed.
The regions power generation industry will also offer opportunity to lubricant suppliers, according to Klines study. Asian electricity consumption is projected to reach 12,000 terawatt hours in 2019, up from 10,000 terawatt hours in 2014. This should spur demand for turbine and circulating oil, which are forecasted to have the highest rate of growth over the next five years. Asia-Pacific will show the most growth in terms of volume, stated Mahajan, and therefore it is the market to be in.
Demand for lubricants used in power generation will be mostly driven by original equipment manufacturers, as first-fill opportunities dominate through the addition of new power generation capacity.
While the study showed projected global growth in the use of synthetic lubes over mineral-oil-based products across all categories, this will likely be less true in developing economies, including many in the Asia-Pacific region. End users there are more reluctant than those in developed economies to pay the high prices associated with synthetic lubricants.
In terms of supply, Sinopec and PetroChina show up in the Kline study as two of the worlds largest industrial oil and grease suppliers. However, their presence is limited to the Asia-Pacific region, and they are outranked for global sales by Shell and ExxonMobil, who also have a presence in the region.
While the general trend in distribution is for larger end users to receive direct supply and smaller ones to go through distributors, the study found that there are differences by region. In developing economies such as those in Asia, both global and local suppliers seem to prefer to rely on distributors to get their products to customers.
The report is titled General Industrial Oils & Grease: Global Market Analysis and Opportunities.