Smartphone Market a Calling for MWFs Firm


Southern Chinas enormous manufacturing base makes it a huge market for metalworking fluids, but some heavy industries are moving overseas, taking with them chunks of demand for those products. This drove one new company in Guangzhou to focus on niche applications such as drilling and cutting oils for electronic devices.

Chinas metalworking fluids production capacity may be the biggest in the world at approximately 500,000 metric tons per year, and demand is mostly balanced with supply, Guangzhou Kosan New Material Technology Co.s Li Maosheng said during an interview at the companys headquarters last month.

But industrial lubricant demand growth is static overall and actually shrinking in a few segments as some industry production factories have begun picking up and relocating to Southeast Asia, the professorate senior engineer explained. Making the situation more dire are improvements in base oil quality – which generally leads to longer drain intervals – and trends such as minimum quantity lubrication, which significantly reduce volumes of metalworking fluids used on individual machines.

Most of the demand is in the southern and eastern parts of the country, as Guangdong province and southern China in general have long been a big potential market for industrial oils, he said. For example, Honda and its affiliates alone have at least four engine and automobile manufacturing facilities in Guangzhou. However, both state-owned companies and private manufacturers such as Honda are starting subsidiaries in Vietnam, to name one Southeast Asia country, for cheaper production.

Metalworking fluids suppliers often follow original equipment manufacturers, and his company hopes to do that as needed in the near future, Li said. But while oils for manufacturing automobile spare parts, wheel hubs and drive shafts play a huge role in Lis companys portfolio, its not its biggest or most important category.

Instead, the communications industry is the primary segment of Lis company, which launched in May after he and several other managers who formerly worked with the state-run Guangzhou Mechanical Engineering Institute formed Guangzhou Kosan along with the existing company GuangzhouFanchu LubricationTechnology Co.

Chinas communications industry, which includes the manufacturing of mobile phones, personal computers and other electronic devices, is second to none in terms of market opportunities for metalworking fluids suppliers, said Li, estimating that 1.4 billion mobile phones were produced nationwide last year. Securing clients with massive production scales such as Hon Hai Precision Industry Co. (better known as Foxconn, which makes Apple iPhones, for example) and Huawei Technologies Co. is lucrative even if the actual volumes of fluids required for manufacturing their products pales in comparison to that of more traditional metalworking fluids applications such as production of automobile components.

For example, one of the Guangzhou Kosan-Fanchu groups clients has a contract for deliveries of intermediate bulkcontainers amounting to around 200 metric tons per month of glass cutting fluids, and the companys total production capacity is only around 7,500 t/y for now. However, as it strives to reach its 10 million turnover goal, the group isnt focused on selling higher volumes, but on improving its research and development endeavors.

Keeping up with technology requirements – such as the uptake of computer numeric control machine automation, the switch to more alloys and three-dimensional printed materials, and the evolution from 2-D glass to blue diamond and 2.5-D or 3-D curved glass in some cases – is paramount to success.

Metalworking fluids technology has advanced rapidly in the past 20 years, and most tremendously in the past 10, mostly as the result of new materials and machines in industry, he said. If the materials are different, the tribology must be different, and therefore the ingredients must be different. Another huge driver of market evolution is government requirements, which are particularly strict and fast-changing in China as the second-largest economy tries to keep up with new environmental and safety standards in the West.

Lis firm relies on its team of experts such as himself, a doctorate with degrees in chemical and mechanical engineering; close ties with the government; and a strong focus on research and development. If you focus on improving quality in R&D, you will find good raw materials to deliver what the customer requires. If your product sells well, the R&D has paid off. But its always changing.

Photo: Joe Beeton/Lube Report Asia

Cover image: Sign in Shenzen, China, points to nearby locations of competing electronic device manufacturers.

Photo: Matt Wakeman/Flickr

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Asia    China    Finished Lubricants    Industrial Lubricants    Metalworking Fluids    Region