ROSENHEIM, Germany – Lubricant formulators have been pushed hard enough to improve product performance. Now theyll also have to worry about where their ingredients come from.
So said Fuchs Petrolubs Lutz Lindemann, during an address to the OilDoc conference here last week. Demands for higher performance are spurring formulators to use new and higher numbers of ingredients, said Lindemann, a member of Fuchs Executive Board, but availability is increasingly restricted by a variety of factors, including consolidation in the chemicals industry and chemicals regulations. As a result, he said, companies will have less flexibility in the base stocks and additives they use and will be more vulnerable to supply chain disruptions.
Lubrication requirements for a wide range of automotive and industrial applications have risen fast the past couple decades, and this has led to more complex formulations. As a rough gauge of product complexity, he divided lubricants into three categories. Simple products are those consisting of one or two base stocks and up to four chemical additives. Products of medium complexity contain two or three base stocks and four to eight additives, he said, while complex products have three or four base stocks and up to 23 additives and often require a special manufacturing process. Based on these definitions, Lindemann said, 40 percent of lubricants are complex, and an equal percentage are of medium complexity.
Modern lubricants are high-end construction parts, said Lindemann, who is charged with overseeing technology, supply chain and business with original equipment manufacturers on Fuchs Executive Board. The company, which is headquartered in Mannheim, Germany, is the worlds largest independent lubricant producer.
While the number of base stocks and additives that blenders need is increasing, changes in the supplier base are making it harder to procure at least some of them.
There has been a significant amount of consolidation in the chemical and petrochemical industry, and this leads to a reduction of complexity on the supply side, Lindemann said. Fewer molecules are available, and more often we are left with a single supplier, whether direct or indirect.
Base oil demand has trended away from conventional Group I oils, which are being replaced by Group II and III. Europe lacks facilities to meet its demand for Group II and III, so imports are meeting current demand. For the moment the region is benefitting from a global glut of Group III, created by the opening of new plants in the Asia-Pacific region and the Middle East. But Lindemann warned that imports will be less available once demand for higher quality lubes rises in Asia-Pacific and the Middle East, creating more need closer to home for their Group II and III output. South America is in a similar position, he said, since its capacity is primarily Group I.
The shift from Group I to Group II and III leaves Europe and South America in a difficult situation logistically, he said.
Regulations such as the European Unions REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) and GHS (the Global Harmonized System for the Classification and Labeling of Chemicals) could drive some existing chemicals from the marketplace, some observers say. The costs of such rules could also discourage new technologies from coming to market.
Lindemann warned that the combination of these trends will force companies more and more to develop single formulas for types of lubricants and to rely on single sources to obtain the materials they need. Producers try to avoid both situations in order to reduce risk in the event of disruptions.
More and more, Lindemann said, international chemical inventories are defining the raw materials choices being made for products such as lubricants.