In 2012, Asia led with 42 percent of global metalworking fluid demand, followed by the Americas at 31 percent and Europe with 27 percent, Phadke said during the webinar, Global Metalworking Fluids: Market Analysis and Opportunities. The presentation also drew from findings in Klines Global Lubricant Additives: Market Analysis and Opportunities study.

Kline found that metal removal fluids or coolants accounted for 49 percent of the global metalworking fluids market, followed by forming fluids at 30 percent, protecting fluids with 12 percent and treat fluids at 9 percent.

Its study focused on the Americas (United States, Canada, Brazil and Mexico), Asia and Europe.

Americas

Metalworking fluids consumption in the Americas reached about 682,000 tons in 2012. The U.S. dominates the market, accounting for nearly 80 percent of metalworking fluid consumption in this region, Phadke said. Canada accounts for about 10 percent of the consumption in the Americas, followed by Brazil and Mexico, each with about 7 to 8 percent of the regions consumption.

The revival of manufacturing industry in the U.S., coupled with the growing economies of Mexico and Brazil would make Americas region a rapidly growing one, though not as fast as Asia, he said.

Asia

Asia consumed about 950,000 metric tons of metalworking fluids in 2012.

The key markets in this region are China, Japan, India and South Korea, Phadke said. The top two markets – China and Japan – accounted for about two-thirds of the consumption in this region. India and South Korea are also quite significant in the amount of metalworking fluids consumed, and they are also showing strong growth.

Europe

Europe accounted for just under 600,000 tons of metalworking fluid consumption in 2012.

Leading markets in Europe include Russia, Germany, France, Italy and the U.K., Phadke said. These top five markets account for nearly three-fourths of the consumption in this region. These five markets are also some of the most industrialized countries in the region. In the case of Europe, growth is essentially experienced due to recovery we see happening – this would be in markets like the U.K., Russia, Spain, Italy, Poland, all of which were severely impacted by the recession.

Suppliers

Phadke said the supplier base in all three regions is extremely fragmented, with the top 10 suppliers accounting for just 45 percent to 55 percent of the total market in each case.

In the Americas, Houghton and Quaker lead the way, each with more than 10 percent of the market, followed by Fuchs, Henkel, BP Castrol, Metalworking Lubricants, Milacron, Yushiro, Chemtool and Master Chemical.

In Asia, Yushiro leads with more than 10 percent of the market, followed by Houghton, BP Castrol, Idemitsu Kosan, Quaker, Sugimura, Fuchs, Daido Chemical, JX Nippon, Indian Oil, Samhwa, ExxonMobil and Kyodo Yushi.

In Europe, Houghton leads with more than 15 percent of the market, and BP Castrol has about 10 percent. They are followed by Fuchs, Quaker, Henkel, Carl Bechem, ExxonMobil, Blaser, Zeller & Gmelin, Cimcool, Total, Rhenus Lub and Statoil.

Very few companies account for more than 10 percent each of the market, Phadke pointed out. The picture is different at the country level, where you could have a few dominant suppliers. But by and large at the regional level, this is the picture. He said such a supply structure is something to be expected, given the nature of the metalworking fluid industry, which has a wide range of products reflecting different machining conditions, the different materials that are being processed, and also different performance requirements that buyers have. As a result, there are very few standardized products – hence no significant economy of scale, hence suppliers are extremely fragmented.

MWF Additives

Kline estimated the global additive consumption for metalworking fluids at about 580,000 tons in 2012. The leading additive categories included corrosion inhibitors, emulsifiers and friction modifiers

Phadke said two key factors are driving additive consumption in the metalworking segment. One is a change in base fluid as API Group I availability declines. He pointed out that formulations are increasingly using naphthenics, experimenting with Group II and III base oil and other higher performance base stocks. That actually has an impact on additive formulations used, he said.

Another main driver is the gradual displacement of low molecular weight chlorinated paraffin, as it is banned in many countries. This is replaced by mid-chain or long-chain molecules, which are not as effective in offering extreme pressure protection. Phosphor and sulfur compounds can be used as substitutes but they bring their own problems in terms of promoting bioactivity or having unpleasant odor.