Above-average Growth for Biolubes


While biolubricants accounted for less than 1 percent of the global finished lubricants market in 2013, the segment is experiencing above-average growth due to increasing market penetration, according to an analysis by Kline & Co.

The consultancy estimated total global lubricant demand at 39.5 million tons for 2013. Milind Phadke, a director in Kline & Co.s energy practice, said during a webinar Nov. 5 that the global biolubricants penetration last year was 0.5 percent or thereabouts. Global demand for biolubricants in 2013 reached the 250,000 to 300,000 metric tons range, Kline estimated.

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The biolubricants market is a tiny portion of the overall lubricants market, and it is growing at a rate which is faster than the overall market, he said. As you would expect, Europe and the Americas regions are the main regions accounting for close to 85 to 90 percent of this total [biolubricants] number, and Asia and the rest of the world account for the balance.

Among countries covered in the study, biolubricant penetration was highest in the Nordic countries (Denmark, Finland, Iceland, Norway and Sweden), Germany and Brazil. It was lowest in markets such as the United States, South Korea and Japan.

Kline concluded the main driver for growth in biolubricants demand is the increase in supply of high-performing, cost-competitive, renewable-sourced base oils – resulting from government regulation and standards – supported by industry efforts to develop biolubricant formulations for various end-users. Its study attributed the relatively limited uptake of biolubricants to lack of regulation, dearth of domestic labels, lack of high-performing formulations that are on par with conventional lubricants, high price and lack of suitable additives.

The study found some common themes among countries that have a higher penetration of biolubricants. We can see that government and industry standards definitely help in sparking the demand, Phadke said. Increased awareness of the environment among the general public – which then translates into different industry participants and trade classes being more proactive – helps generate demand. Government support in the form of public procurement directives is another key factor in creating demand for biolubricants.

Barriers to wider consumption of biolubricants exist in the form of existing infrastructure, he said. For example, elastomer seals, storage tanks and flushing requirements can prove barriers to biolubricant conversions in some applications, such as passenger cars, where OEMs may need to adjust engines to accommodate a biolubricant. Pricing can prove another barrier, Kline noted in its findings, with finished biolubricant prices affected by factors such as the product adoption curve, base oil raw material price and transportation costs.

Phadke noted that one of the biggest challenges in analyzing the market is defining what constitutes a biolubricant. There are many companies, regulatory bodies, marketing people and other entities operating in this industry – all of these companies have essentially appropriated the bio label for their use, Phadke noted. The understanding each brings to defining a biolubricant is quite different. In many cases, its in conflict with how other companies are understanding what the bio label means, he said.

According to Kline, Panolin and Fuchs Petrolub SE are the leading suppliers of finished biolubricants worldwide. Cargill has a significant position in transformer oils. Klines study noted that the presence of other market players depends on their region of origin and established distribution networks. Statoil is a leader in the Nordic countries, Quaker in Brazil, and Kajo is a leading supplier for private label lubricants.

Phadke noted that the leading market players established themselves through access to unique formulations, specific regional or industry regulation or through the aftermarket of green OEMs. Examples include Cargill (which supplies di-electric fluids, Houghton (metalworking fluids), Vickers Oils (marine), Carl Bechem GmbH (railroad), Condat (tunnel digging) and York Lubricants (mountain equipment).

Kline focused on 15 countries, spread across the globe, that were considered interesting either due to current biolubricants penetration, or for growth opportunity. The study covered 10 markets in Europe, including France, Germany, Belgium, Luxembourg, the Netherlands, Sweden, Denmark, Norway and Finland. The Americas markets covered include the United States and Brazil. In Asia, Klines study focused on Japan and South Korea because those markets have had eco-label standards for a long time, and the company wanted to see the impact of that type of label on the market. The study also covered China, to see what the growth potential might be there.

To help frame the analysis, Kline considered three criteria: biodegradability, bio-sourced and toxicity. Any products that fulfills any one of these criteria can essentially be considered a biolubricant, he said.

Biodegradability refers to lubricants which, in their natural state, biodegrade format least 60 percent in 28 days and are considered readily biodegradable. The biodegradability is measured through tests from organizations such as the OECD (Organization for Economic Cooperation and Development), ASTM and ISO (International Organization for Standardization).

Bio-sourced refers to lubricants with bio-based carbon in excess of 25 percent, as measured by an ASTM test. Rapeseed, soybean, sunflower, palm, tallow, coconut and cellulosic sugar are all processed into bio-sourced base stocks.

The analysis included lubricants which are non-toxic to the environment, which can be measured by OECD or ASTM tests. For the analysis, Kline specifically excluded some non-toxic or biodegradable food-grade lubes which are not bio-sourced.

Klines study is titled Opportunities in Bio-lubricants.

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