Chinese consumption of metalworking fluids may be flattening in terms of volume, but industry insiders say suppliers should benefit from the governments newly released Made in China 2025 strategy.
The policy, which pushes Chinas manufacturing industry to become much more value-added and sustainable, should create opportunities in metalworking fluids by spurring changes in the processes and materials that manufacturers use.
For example, the auto industry, one of the main users of metalworking fluids, is feeling pressure to make lighter vehicles to reduce energy and resource consumption. While there are many lightweight materials to choose from, including magnesium, carbon fiber and glass fiber, aluminum and aluminum alloys are considered the most cost-effective.
In the western markets, aluminum has been widely used to make auto parts since the 1990s, and in recent years even the whole body, but the trend is still in its initial stage among Chinese brands.
Chinas first vehicle using an aluminum-made engine hood was launched in October 2014 by Chery Jaguar Land Rover, a Changshu, Jiangsu province-based joint venture between Tatas Jaguar and Chery Auto, a large private automaker based in Anhui province. The partnership is expected to manufacture an aluminum-bodied Jaguar model exclusive to the Chinese market in 2016.
The transformation from using steel to aluminum brings great opportunities to our metalworking fluid suppliers because processing different metals [creates a need for] different fluids, Hu Youting, technical director at the Shanghai Lubricant Trade Association, told Lube Report Asia. I see Made in China 2025 offering a lot of opportunities to the lube and grease industry. The key is if our lube suppliers are able to catch them. Opportunities often come with challenges.
One such challenge involves wastewater treatment. Currently, regulations in China give little consideration to the effect that metalworking fluids can have on wastewater treatment. As a result, use of chlorine by Chinese fluid manufacturers is highly limited, but sulfurized fats and nitrites are common ingredients. However, the Chinese government is currently drafting the countrys first standard for metalworking fluids, and some observers believe it may restrict use of sulfurized fats and nitrites.
Sulfurized fats provide better performance in lubrication, but are posing challenges for waste water treatment, Hu said. Replacing sulfurized fats with more eco-friendly substances while maintaining lube performance is actually a challenge faced by global metalworking fluid manufacturers.
Most manufacturers are working with their clients to sort it out, said a sales manager at Shanghai Starry Chemical, a major supplier of additives for metalworking fluids. Some of them comply with U.S. standards, while some comply with [European Union] standards,
Some MWF suppliers are trotting out proposed solutions. China Yushiro Chemical Industry, a Qidong, Jiangsu province-based joint venture between Qidong Oils Factory and Japans Yushiro Chemical Industry, recently published a patent which shows it developed a water-based, full synthetic cutting oil using nanotechnology. According to Yushiro, this nitrite-free oil is able to provide improved lubrication thanks to the nano-polymer materials - graphene and nano-metal oxide. Yushiro said the product is targeted at high-end clients.
Another company, Dongguan city, Guangdong province-based Amer Lubricant Technology Co., offers to help manufacturers reduce discharges of problematic chemicals, partly through the use of water-based metalworking fluids. According to Amer, it replaces mineral oils with synthetic esters. In October 2014, it started to promote a package of cutting oils along with oil change, cleaning and recycling services with the promise of zero discharge. Again, the company says the package is targeted at industry in wealthier coastal areas.
Formulators of metalworking fluids face additional challenges, including demand for fluids that are more durable, with better high-temperature performance and better oxidation stability.
These qualities are required by the manufacturing industry, whose equipment is moving toward high automation, long-term durability and the ability to [operate] under extreme conditions, Hu said. Metalworking fluids have to evolve with our manufacturing industry.
Opportunities from innovation are important because some manufacturing sectors that previously spurred growth in demand for metalworking fluids appear unlikely to do so in the foreseeable future.
Chinas metalworking fluid market experienced a weak year in 2015 because of shrinking demand for cars, as well as the continuing decline of the steel industry. I dont know if this will get any better under the new manufacturing strategy, said the sales manager at Starry Chemical.
Chinese auto sales are still rising, but at a more moderate pace than in previous years. From January to November 2015, China sold 21.7 million vehicles, up 3.3 percent year on year. But in 2014, the year-on-year growth during the same period was 6.1 percent.
Also slowing is the growth in demand for mobile devices, which contain processed color metals. The demand for mobile phones and tablets is shrinking, too, the Starry Chemical official said. Luckily, China has a large market.