No Surprise: Asia Leads MWF Growth


The metalworking fluids market in North America, Asia and Europe is projected to grow at about 3 percent per year, from 2.1 million metric tons in 2010, to nearly 2.5 million tons in 2015, according to Kline & Co.

Asia is the fastest growing market with 5 percent annual growth from 2010 to 2015, said Milind Phadke, India-based project manager for Klines Energy Practice, during a webinar June 29. Over those five years, Kline projects North Americas metalworking fluids market will grow 2 percent per year, and Europes by 1 percent annually.

In Asia, the growth is driven by growth in manufacturing, not only catering to regional demand but also the shift that is happening with manufacturing relocating from high cost economies to low cost economies, Phadke explained. Much of the growth is still recovery from the baseline consumption level. But coming out of the recession, many of the governments in both North America and Europe are focused on shifting their economy from being overly dependent on financial and other services, and retaining whatever manufacturing strengths they have.

As a result, he said, some of the shift to Asia may be dampened a little due to government support of manufacturers.

In the webinar, Kline focused on North America (United States, Canada and Mexico), Asia and Europe, whose estimated metalworking fluid consumption totaled 2.1 million tons, valued at $6.9 billion, in 2010.

Since 2007, the last time Kline conducted the study, Asias metalworking fluid demand grew 3.3 percent per year, while Europes slipped 1.8 per year and North Americas fell 7.8 percent per year. Asia emerged much quicker and was less negatively impacted than Europe and North America in that three year time frame, said George Morvey, U.S.-based project manager with Kline.

North America
North Americas metalworking fluid market amounted to 613,000 tons in 2010. The United States accounted for 83 percent of the consumption, Canada for 11 percent and Mexico for 6 percent.

The North American metalworking fluid market was fragmented, Morvey said, with the top 10 suppliers accounting for just 55 percent of the market. Those were Houghton (12 percent); Quaker Chemical (10 percent); Henkel (7 percent); Fuchs (6 percent); BP Castrol Industrial (5 percent); ExxonMobil, Milacron and Metalworking Lubricants (each at 4 percent); Chemtool (2 percent); and Master Chem (1 percent). Houghtons share includes D.A. Stuart volumes, but not the 2011 acquisition of Shells metalworking fluids and metal rolling oils business.

Asias metalworking fluids market amounted to 891,000 tons in 2010. Most of the important country markets in this region had a very shallow recession, Phadke said. They saw a downturn for maybe a year. Since then, they have been on the upswing.

In 2010, China accounted for 43 percent of metalworking fluids consumption in Asia, Japan, 24 percent, India, 13 percent and Korea, 10 percent. All four of these markets have a pretty strong base in automotive manufacturing, as well as steel production, and manufacturing of machinery and other equipment, Phadke said. Other important Asian markets include Thailand, Vietnam and Indonesia.

Metalworking fluids consumption in Europe – including Western, Central, and Eastern Europe and Russia – totaled 601,000 tons in 2010, falling around 1.8 percent per year from 2007 to 2010. The market did decline due to the recession, but the overall decline was not as bad as one would expect, he said.

The European metalworking fluids market weathered the storm largely because of Germany (21 percent of the regions consumption in 2010) and Russia (23 percent). Both of them have seen a rebound in manufacturing, he noted. In the case of Germany, this has been due mainly to exports to Asia. In Russia, its more due to internal demand linked to appreciating energy prices.

Automotive Manufacturing
Global automobile production increased from 63.6 million units in 2004 to 71.7 million in 2007 and 75.2 million in 2010.

Morvey noted the recessions impact on vehicle production and sales. For example, in North America in 2008, car and light truck production was 12.9 million units, he noted. That dropped to 8.8 million units in 2009.

In 2010, North American car and light truck production was back up to 12.2 million units. So there is light at the end of the tunnel, he added, noting that the industry predicts about 13.5 million units produced for 2011. The region is starting to recover, which will be a positive for metalworking fluids demand as well as all other industrial and automotive lubricants.

Klines report is titled Metalworking Fluids 2010 Global Series: Market Analysis and Opportunities.