Industrial Lube Demand to Dip


Industrial Lube Demand to Dip

Asia-Pacifics demand for general industrial lubricants and grease is expected to shrink roughly 0.1 percent through 2021, with declines in China and Japan offsetting increases in other countries, Kline & Co. said in an interview. The region dominates the global market, accounting for 2.6 million tons, or 41 percent of global demand in 2017.

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Demand in China is declining because of the shutdown of excess capacity in the primary metals and mining industries, and improvements in maintenance practices. In Japan, demand is expected to decline as industries continue to shift [production] overseas, said Kunal Mahajan, project manager for the Parsippany, New Jersey-based consultancy.

Countries such as India, Indonesia, Vietnam, Malaysia and Thailand are expected to see increased demand. Infrastructure development, [the] shift of low-cost production, especially to Southeast Asian countries, and economic growth are expected to drive the demand for general industrial oils, Mahajan told Lube Report Asia.

Overall, hydraulic fluids dominate the Asia-Pacific market, making up roughly half of demand last year. Industrial gear oils and turbine and circulating oils are the next-biggest product categories, followed by grease and then compressor oils and refrigeration oils. Royal Dutch Shell is the largest supplier in the region.

Lubricant blenders in the region recently began using API Group II base oils to manufacture general industrial oils. Because usage of Group II for these oils in the region is still limited, Kline was unable to provide specific figures on how this may impact the market.

Kline anticipates the power generation industry – which is expected to grow in the region because of economic growth and government initiatives to provide better electricity access – to increase its demand for general industrial lubricants and greases. The industry in Asia is shifting its focus to renewable sources of energy, such as wind and solar. As a result, lubricants used the most in these sources are expected to grow much faster. For example, in wind power, only gear oils, hydraulic fluids and greases are used, and they are expected to grow much faster than other lubricants in the power generation industry in Asia, noted Mahajan.

Mahajan also noted that demand for synthetic products is expected to vary significantly between countries in the region. For example, India is an especially price sensitive market, and convincing end-users there to purchase synthetic products over the cheaper mineral oil alternatives is a challenge. China, however, is expected to see an increase in demand for synthetics as the country shifts towards high-end manufacturing.

Chinas shift will also lead to increased collaboration between original equipment manufacturers and lubricant suppliers. This means it is an opportunity for lubricant suppliers who already have synthetics in their portfolio and/or have close relationships with the OEMs in the country, said Mahajan.

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