U.S. Synlubes to Continue Growth

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U.S. demand for full synthetic lubricants and functional fluids will increase 6.8 percent per year by value, to $6.3 billion (and 555 million gallons) in 2018, driven by increasingly demanding equipment specifications in several lubricant categories, Freedonia Group found.

The projection is up from 5.7 percent annual sales growth between 2008 and 2013. Growth will result from increasing market penetration of synthetic products at the expense of conventional fluids, analyst Jason Carnovale said in a news release. Freedonias demand figures do not include synthetic blend products.

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Freedonia expects engine oils will account for the largest share of gains, with sales growing 10.3 percent per year to $2.3 billion in 2018. In the light vehicle market, the research firm said synthetic engine oils will benefit from the trend toward low viscosity, energy efficient lubricants, which often necessitates the use of synthetics.

Over the past few years, several motor vehicle manufacturers have begun specifying synthetic engine oils for many of their new cars. The upcoming ILSAC GF-6 specification will facilitate the introduction of even lighter viscosity grades than those currently used.

The research firm also expects synthetics to begin to see wider use in the heavy-duty and off-highway segments as well, primarily resulting from the improved fuel efficiency and extended maintenance intervals they allow. We expect this to be a broad-based trend, with excellent growth opportunities for engine oil and hydraulic/transmission fluids, Carnovale told Lube Report. In the engine oil segment, over time we expect engine manufacturers and truck owners to switch to lower viscosity grades, primarily to improve fuel efficiency, which will eventually translate to using more synthetics.

Freedonia projects synthetic transmission and hydraulic fluid sales will grow 9.5 percent per year to $945 million in 2018. For hydraulic and transmission fluids, the general trend of higher pressures and temperatures, smaller fluid sumps and desire for longer drain intervals will tilt the balance toward using synthetics more often. This has already happened for heavy-duty automotive gear oils, where synthetics have proven to be economically favorable, Carnovale said.

The study projects synthetic metalworking fluid sales will grow 4.2 percent per year to $430 million in 2018, and synthetic dielectric fluids will grow 5.7 percent per year to $145 million in 2018. The research firm believes synthetic metalworking fluids and dielectric fluids will continue to be used where they can provide worker safety or environmental benefits or meet a specific performance requirement, although such markets tend to be more mature and will present more modest prospects for growth.

Compared to other formulation types, synthetic metalworking fluids can provide several advantages – such as fluid lifetime, bacterial resistance, fluid clarity and workplace cleanliness – but they are mostly suited to operations where cooling is the most important function of the lubricant, Carnovale said. He noted that one area with above average growth prospects will be in machining metals with poor heat transfer characteristics, such as titanium.

Synthetics are a good choice in the transformer/dielectric fluid market where fire or safety and environmental issues are a major concern, he said. There will be growth opportunities in areas such as indoor commercial and industrial transformers and transformers in environmentally sensitive locations, he said. Competition from natural bio-based esters will be a particularly important factor holding back faster gains, however.

U.S. Synthetic Lubricant and Functional Fluid Demand

(million dollars)

% Annual Growth

Year

Years Range

2008

2013

2018

2008-2013

2013-2018

Fluid Type

Total Synthetic function fluid demand

$3,450

$4,550

$6,325

5.7

6.8

Engine oils

915

1,385

2,265

8.6

10.3

Antifreeze & Deicing Fluids

1,050

1,170

1,290

2.2

2.0

Transmission & Hydraulic Fluids

385

600

945

9.3

9.5

Heat Transfer Fluids

395

460

575

3.1

4.6

Metalworking Fluids

260

350

430

6.1

4.2

Dielectric Fluids

88

110

145

4.6

5.7

Other

357

475

675

5.9

7.3

Source: The Freedonia Group Inc.

The 289-page study, titled Synthetic Lubricants & Functional Fluids, is $5,200 from Cleveland-based Freedonia Group. For more information, visit www.freedoniagroup.com.

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Business    Finished Lubricants    Miscellaneous