Many lube marketers had hoped that growth markets such as China, Brazil and India would be strong enough to pull 2009 ahead of 2008, said Lutz Lindemann, executive board member at the Mannheim, Germany-based independent lubricant blender. “But in light of the economic and financial crises,in 2008 the marketsank back to the level it had 10 years before,” in 1998, he told the 17th International Colloquium Tribology here last week.

Worse was to come: Demand in 2009 was knocked back four full decades. Lindemann and Fuchs’ head of strategic marketing, Apu Gosalia, estimated that global demand for lubricants peaked in 2007 at 37.2 million metric tons (not including marine oils), fell 2.2 percent in 2008 to roughly 36.3 million metric tons, and then got slapped full-force last year. Gosalia later confirmed to Lube Report that global lubricants demand in 2009 shriveled to only 32 million metric tons (without marine oils), a volume similar to that of 1970.

Recovery from this spiral won’t be easy, Lindemann told the colloquium’s 650 participants, gathered at the Technische Akademie Esslingen. On a global basis, “overall the five- to 10-year trend will be stagnation and low growth, due to higher quality standards for lubricants that will compensate for volume growth in emerging markets.”

By region, Asia-Pacific is the world’s largest market, with 34 percent of global volumes, followed by North America with just under 20 percent, Europe (26 percent), Middle East and Africa (about 11 percent), and Latin America (9 percent).

By country, the United States is the world’s leading consumer of lubricants, at 6.5 million metric tons a year in 2008, followed by China (4.7 million) and Japan (1.5 million). Germany, Lindemann noted, comes in at No. 7, with 1.1 million metric tons, and after that no other country has a market above 1 million tons a year. “Altogether, the top 20 lubricant markets accounted for nearly 75 percent of worldwide lubricant demand,” he said.

If you look at the same markets on a per capita basis, the United States also leads, consuming more than 23 kilograms a year per person. China, by contrast, has one of the world’s lowest rates of consumption, at 3.5 kg per capita. According to Lindemann, this foreshadows two trends: China has huge room to grow as a lube consumer — and the United States has plenty of room to rationalize and become a less voracious lube consumer.

Looking at product segments, automotive lubricants make up about 56 percent of global demand, and industrial oils 36 percent, he continued. Metalworking fluids and rust preventives comprise 5 percent, and the rest is lubricating greases. However, these market shares differ greatly from region to region. At 43 percent, Western Europe sees the lowest product share for automotive lubes; in the Middle East, they are 73 percent of the total market consumption — and they’re 80 percent of the market in Africa, Lindemann said.

Looking more closely at product markets, Fuchs’ data for 2009 suggests that the automotive segment probably fell between 5 to 10 percent from 2008’s consumption of 20.3 million metric tons, with the strongest declines felt in Europe and the United States.

Turning to industrial oils, Lindemann said that some applications are ripe for increased volume demand, such as drivetrain lubricants for wind energy, hydraulic fluids for mining, and oils for refrigeration and air conditioning systems. In fact, “industrial oils probably were the only product segment that saw volumes grow steadily in the past decade,” he said.

However, the industrial segment was buffeted by the global recession, and after reaching 12.9 million metric tons in 2008, its 2009 volumes shrank by 18 to 22 percent — most painfully in Europe. Efficiency is catching up with this market, and Lindemann suggested that the next five to 10 years will trend towards very low growth at best, due to longer oil drain intervals and improved lubricant quality.

Metalworking fluids and corrosion preventives took a big hit worldwide during 2009, as well, falling 15 to 20 percent off their volume of 1.9 million tons in 2008. Here again, the worst-hit was Europe, where these products plunged about 40 percent. “It may increase a bit in 2010,” Lindemann commented hopefully.

“Lubricating greases have seen global demand hover around 1.1 million metric tons over the years,” he went on, “and in 2009 probably declined between 5 and 10 percent worldwide. The U.S. market probably saw the strongest decrease, due to this market’s heavy use of loss lubrication in industry,” as manufacturing activity crawled to a near-stop.

Before closing, the Fuchs executive turned his attention to the geographic bright spots that could reward investment in their lubricant industries. He noted that five years ago, Brazil, Russia, India and China were expected to have the greatest economic potential through 2050. Three of these continue to show promise, but Russia has taken a big step backwards. Lindemann said Russia’s lube market today is characterized by poor quality, low rates of increase, and low prices. “It’s not recovering yet,” he added.

Elsewhere, Lindemann said, “we believe that especially Mexico, Egypt, Turkey, Iran and Vietnam are the most promising markets, although Iran is still a difficult market.”

Of these, Mexico already has a per capita lube demand of 6 kg a year, and if Turkey, Egypt, China, Vietnam and India could simply match that, each would be a significant lubes market, Lindemann surmised.

“My economics professor said don’t make assumptions,” he said, “but we did it anyway to extrapolate what the potential growth could be.” If consumption grew to 6 kg per capita, he forecast, China would see its lube market grow 75 percent, Vietnam 150 percent, and Egypt about 50 percent. Turkey would grow its lube market an impressive 30 percent, and India’s would climb a whopping 500 percent.

These gains are not guaranteed, of course. Lindemann emphasized that demand could be affected by restrictions on trade, availability of energy and raw materials, and how resources are allocated in each country. Still, “a 6 kg per capita level of consumption may give us a stable market in these countries, with a decent quality level.”

Who will be left to serve these markets? Lindemann noted that in the mid-1990s, the number of lube manufacturers in the world probably amounted to around 1,700. By 2005, just around 700 were left, and the recession no doubt thinned their ranks again.

He also cautioned that many emerging markets are dominated by local/state owned oil companies, and these have begun to go international and turn westward for markets. Chinese oil giants PetroChina and Sinopec, for example, have very aggressive merger and acquisition strategies for their lubricant businesses, and have been buying assets and resources in other developing markets. At the same time, many countries are opening their markets to foreign competitors, which should help them boost the quality of the lubes consumed.

International trade and competition can only intensify, Lindemann advised. “Globalization is ongoing. It’s a one-way street, and there’s no going back now.

“It all adds complexity to our production and research, but it also adds opportunity” for both major integrated companies and independent lube manufacturers, he concluded.