Foreign industrial investments and growing reliability are key trends affecting Central Europes lubricants market, Robert Uberman, development director for Krakow, Poland-based Orlen Oil, told the ICIS World Base Oils & Lubricants Conference here on Feb. 24.

Uberman loosely defined Central Europe to include all the countries between Germany in the west and Russia in the east, and from the Baltic Sea in the north to the Balkans in the south. The region, which includes 10 EU member countries, plays a growing role in the European economy, he said, and is a growing industrial hub competing with the Far East.

For example, he pointed out, the value of manufactured goods exported from three countries – Poland, Slovakia and Czech Republic – rose tenfold from U.S. $25 billion in 1995 to $250 billion in 2009. Poland was the fastest growing EU economy in 2009, Uberman said.

A Harvard Business Review study from early 2011 ranked Poland as one of the top six most attractive world economies for multinationals, he continued, and Hungary, Bulgaria and Ukraine were among the next 18.

Fully one-third of Europes 297 automobile plants in 2009 were located in Central Europe. In five or 10 years, Germany may be overtaken by Poland or Czech Republic as home to the largest number of European auto plants, said Uberman.

Demand for base oils in Central Europe has grown, he continued. By 2007, it reached 7 million tons, just below Western Europes 7.36 million tons.

Central and Eastern Europe together have 24 base oil plants with total capacity to produce 6.3 million t/y, including Russian and CIS capacity, Uberman noted, citing the 2010 Base Stock Guides from LubesnGreases. Base oil refineries in Bosnia, Belarus, Czech Republic, Hungary, Poland and Ukraine have a total of about 1.5 million t/y of capacity. But many plants operate much below capacity, said Uberman. Only Orlen Oils Plock plant is operated at capacity.

Central Europes four key base oil producers, he said, are Orlen Oil with 160,000 t/y capacity in Plock; Paramo with 125,000 t/y in Kolin; Lotos Oil with 245,000 t/y in Gdansk; and MOL with 200,000 t/y in Szazhalombatta. Less than half of Orlens production goes to the merchant market, while larger shares of Lotos and MOLs output goes to external sales.

Principal players in the Central European lubricants market and their estimated market size are: Orlen, nearly 120,000 t/y of finished lubricants; Mobil, more than 90,000 t/y; Lotos, about 80,000 t/y; BP/Castrol, over 70,000 t/y; Shell, over 60,000 t/y; Prista, about 55,000 t/y; and MOL, over 40,000 t/y.

Reliability is what our western customers expect from us, Uberman said. They seek product quality and approvals, safety of supply, shorter product delivery lead times, service and technical feedback and financial strength.

The preference is for companies that control additives or base oils, he continued. Customers want to see control over key raw material supplies, and internal production of base oils really helps. Effective strategic alliances with additive producers count for a lot too.

Effective and dedicated distribution networks are also key factors for medium-sized companies, Uberman added. You should have operational control of your distribution network, and use it to supply technical support.

Among the trends in the Central European lubricants industry, said Uberman, are demands for higher quality industrial lubricants, and REACH legislation has impacted formulations. He sees growing cooperation directly between industrial lubricant suppliers and their industry customers, including oil monitoring programs and lubricant management systems.

On the automotive side, emissions legislation, new specifications and OEM requirements are very similar to other EU countries, but with a certain delay, said Uberman. Our car fleet is much older than in Western Europe. For example, in Poland, 14 years is the average age of a passenger car. Its only 8.5 years in Western Europe.