We expect the industrial segment to gain market share, while the consumer automotive segment shrinks over the forecast period, Sushmita Dutta, project lead, energy, for Kline, said during a webinar July 15. North Americas commercial automotive lubricants segment is expected to grow slowly.

Industrial products constituted the regions biggest portion – 46 percent – of branded lubricants, followed by consumer and commercial lubes at 29 percent and 25 percent, respectively.

Suppliers

Kline found that major branded suppliers combined to account for 44 percent of the total North American demand in 2014. Shell ranked first with close to 350 million gallons in volume, Kline estimated, followed by ExxonMobils more than 250 million gallons and Chevrons more than 150 million gallons. Trailing were BP, Phillips 66, Valvoline, Suncor Energy and Mexlub. The volumes included process oil.

Within the U.S. market in 2014, Shell also led, supplying more than 250 million gallons, followed by ExxonMobils nearly 200 million gallons and Chevrons roughly 150 million gallons. Behind were Phillips 66, BP and Valvoline.

Shell topped the consumer automotive lubricants segment in the U.S., followed by Valvoline and BP. Shell also led in the commercial automotive segment in the U.S., followed by Chevron and ExxonMobil. Among major branded suppliers in the industrial segment, ExxonMobil led the way, followed by Chevron and Phillips 66.

In the consumer segment, we expect that increased use of long-service-life lubricants such as synthetics will offset any growth due to new car sales. Synthetic lubricants are well established in the consumer segment, and going forward there will be greater emphasis on using lower viscosity oils with longer service life. Moreover, increasing usage of fill-for-life [automatic transmission fluid] and gear oils will continue to check the demand growth.

The industrial lubricants segment is the fastest growing one in the U.S. Lube demand growth in this segment will be driven by growth of automotive manufacturing and oil and gas industries, Dutta noted. Moreover, we also expect that reshoring of manufacturing to the United States will provide the much needed growth impetus to the industrial sector of the country.

She said the growth of the U.S. economy and the increase in commercial and industrial activities has helped the commercial automotive industry to turn the corner after posting a huge decline during the 2008-2011 period. Although the market has recovered from the recession, its still 9 percent below the pre-recession consumption level of 2008, Dutta said.

Countries

U.S. lube demand, which has essentially remained flat since 2012, accounted for more than 84 percent of total North American demand in 2014, followed by 9 percent for Canada and 7 percent for Mexico.

The recession was so severe, that even after the recovery, the [U.S.] market continues to take baby steps of growth each year, she noted. As a result, finished lubricants demand remained essentially flat since 2011. Also, considering the lubricants market in the country is mature and saturated, we expect it to remain slow in the next five years.

Industrial lubricants accounted for 48 percent of total U.S. finished lubricants demand in 2014, consumer automotive lubricants for 28 percent and commercial automotive lubricants for 24 percent.

While lubricants demand in Canada is expected to remain flat, Mexico is expected to report moderate growth of 2 percent over the forecast period, Dutta said. Similar to the United States, Canada will reflect the trend of a slowly growing industrial sector and a shrinking consumer segment.

In Mexico, the growing manufacturing sector is driving demand for industrial lubricants, she pointed out. In addition, she said, the country is witnessing strong growth in automotive sales and production, and this should drive demand for all types of automotive lubricants in the country.

Klines study is titled, Opportunities in Lubricants: North America Market Analysis, 2014-2016.