By 2014, Kline projects full synthetics and semi-synthetics together will account for 11 percent of a global lubricant market which is estimated to total 40 million metric tons by then. Synthetic lubricants included in the study were those made with esters, polyalkylene glycol, polyalphaolefin, API Group III, phosphate esters, silicones and others.

On the industrial side, about 8.5 percent of the 15.8 million metric tons of lubricants consumed in 2009 consisted of synthetics, up from 8.1 percent in 2007, according to Kline. In the commercial automotive lubricants category, synthetics accounted for 5.4 percent of the 10.5 million metric tons demand in 2009, up from 4.8 percent in 2007. Synthetics made up 19.3 percent of 8.8 million tons global demand in the consumer automotive lubricants market in 2009, compared to 18.1 percent in 2007. The synthetics figures include both full- and semi-synthetic lubricants, Agashe said.

Increased availability of high-quality base oils plays a key role in increasing the total size of the synthetic lubricants pie. Essentially what thats done is give [original equipment manufacturers] the confidence that they can recommend a 0W product, a 5W product, in any part of the world, and theres going to be adequate supply for the finished lubricant marketers to meet the demand in their country, she explained. So many of the OEMs are now moving towards global specifications.

The Kline study, Global Synthetic Lubricants 2010: Market Analysis and Opportunities, found the European region to be the largest consumer of synthetics by volume, with synthetic lubricants accounting for 22.2 percent of total lubricants consumption in 2009. In North America, synthetic lubricants demand hit 10.8 percent in 2009. And in the Asia-Pacific region, the synthetic lubricant share of total lubricants demand reached 6.4 percent in 2009, it found.

Consumer Automotive
Synthetics and semi-synthetics accounted for about 22 percent of global passenger car motor oil consumption in 2009.

Europe is the largest consumer of synthetic passenger car motor oils and has the largest synthetic penetration, Agashe said. Full- and semi-synthetic passenger car motor oil accounted for more than 50 percent of Europes PCMO demand in 2009, Kline found. For Europe, whats interesting is that theyre not limiting the synthetic recommendation just to premium or high-performance cars, but we also see mass-market vehicles recommending use of synthetics. There is consumer demand for extended oil drain intervals, lower maintenance costs and environmental benefits.

Changes in North America are expected to give rise to greater demand for synthetics. Examples include Toyota and Honda recommending 0W multigrade motor oils for their 2011 models, along with General Motors introduction of its proprietary Dexos1 motor oil specification.

Nearly 20 percent of PCMO demand in Asia-Pacific consisted of synthetic types in 2009, Kline found. Agashe noted that GM sells more cars in China than it does in the United States. As these OEMs are sending more vehicles outside of North America, outside of Europe, we are going to see increased demand for synthetics and synthetic blends come from the emerging parts of the world, Agashe said. We really feel theres going to be a big change in many, many emerging parts of the world, transforming their needs from using monogrades to high viscosity multigrades, and then from that leapfrogging many generations right to 5W or even 0W.

In Africa and the Middle East, theres a certain part of the population driving premium cars, such as Mercedes and BMW, and they are really expected to create increased demand for synthetics, Agashe noted, although those regions showed very little demand for synthetic PCMO in 2009.

Commercial Automotive
Synthetics and semi-synthetics accounted for about 5.4 percent of heavy-duty motor oil demand in 2009, according to the Kline study.

While Europe, and then North America, are the leading regions in synthetics penetration on the HDMO side, thanks to their support for a modern and well-maintained fleet, Klines study found it remains difficult to convince owners/operators and fleet managers about the synthetics value proposition.

Klines did uncover some opportunities for synthetic HDMO among those whose equipment needs to run 24 hours a day, seven days a week, such as for harvest season or at some mines. We really feel in this category, there seems to be more opportunity in light commercial vehicles and for commercial vehicles that are fitted with diesels, she said.

She noted that factors such as poorly maintained fleets, significant use of monograde oils and harsh operating conditions make it tough for synthetics to grow on the heavy duty side in parts of Asia-Pacific, Africa, the Middle East and South America. Synthetic has not caught on, and the future doesnt look as exciting as it does on the PCMO side of the business, in those areas, Agashe said.

Industrial
About 8.5 percent of global industrial lubricants demand in 2009 consisted of synthetics and semi-synthetics, Klines study found.

From an industrial standpoint, Europe and North America are the leading regions in terms of demand for industrial synthetic lubricants, Agashe said. Some of the factors driving that include requirements of modern equipment, advanced technology, improvements in management practices, and environmental and government regulations. Synthetic lubricants are necessary in key situations, according to Agashe, citing examples such as when using a lubricant near a source of water, or fire-resistant oils in certain types of transformers.

In Asia-Pacific, she said, that is less of a factor. We do see a lot of modernization of equipment, with a significant export focus, Agashe said. Especially a country like China, wherein local consumption is not as high, but theyre producing a lot of goods and services for the rest of the world. In order to meet the quality requirements, they have to import more sophisticated equipment that really needs to use synthetic formulations.

She noted that automotive production is moving into the Asia-Pacific region. The number of cars and trucks being produced in China and India today are growing significantly, which means greater use of metalworking fluids, Agashe said. And as these countries try to emulate maintenance practices as followed in the West, we see greater interest in biodegradable products and also in synthetic products.

Agashe pointed out that in South America, there is really not a big market for industrial synthetics except in Brazil. Because it produces a lot of cars, and produces a lot of mining equipment, machinery and agricultural equipment, we are seeing greater interest in Brazil, she commented.

Perception
The consumer perception part of the study revealed some key reasons for why synthetics saw growth when other products saw declines.

People who use synthetics in their automobiles were doing so for a couple of reasons, Agashe said. One was when a consumer owned a high-performance car where the original equipment manufacturer recommended use of a synthetic. The owners of high-performance vehicles tended to be not as badly impacted by the recession, she noted. Theyve invested a lot of money in their vehicles. They are true believers who absolutely believe in the power of synthetics and want to continue using them.

The semi-synthetic motor oil market was more heavily impacted by the worldwide recession in recent years, Agashe noted. We found out people who were using synthetic blends are not really the true passionate loyalists, who are loyal for a particular brand or particular product quality, she said. They were folks who once in a while when it felt good, got something better – a synthetic blend priced between conventional and full synthetic. These are the people who, when the economy went into the doldrums, chose to go back to buying conventional products.

Klines report is titled, Global Synthetic Lubricants 2010: Market Analysis and Opportunities.