Demand growth for both additives and finished lubricants is expected to be modest through 2019. Kline predicts a compound annual growth rate of 1.2 percent for lubricants during that period, and 1.6 percent for additives, Energy Practice Director Milind Phadke noted.

It is a recent phenomenon for additive demand growth to outpace lubricants. From Klines historical perspective, we see that [before the recession], lubricant additives closely tracked finished lubricants demand, as would be expected, Phadke said. Both went down in the aftermath of the recession in 2010, but after that, additives showed growth of 1.8 percent [per year], which is higher than finished lube demand.

Additives for metalworking fluids showed the starkest instance of this, sinking almost 8 percent from 2008 to 2010 due to contractions in major industries such as auto manufacturing, shipbuilding and steel working. The category bounced back, however, with a compound annual growth rate of more than 6 percent between 2012 and 2014.

The increased consumption of additives is likely driven mostly by demand for higher quality finished lubricants, he noted. Higher quality lubricants require higher additive treat rates.

Whether due to a shift toward lighter viscosity oils in some parts of the world, more focus on fuel economy in various lubricants segments, pushes for improved engine cleanliness or the increased usage of biodiesel and ethanol, lubricant is generally improving, and in almost all cases this requires more additives.

Overall the growth rate has been gradual, but in some cases it has been rapid.

In the automotive lubricants segment – which accounts for about 60 percent of total additive use – the big additive categories are dispersants, detergents and viscosity index improvers, which combine to account for two-thirds of additives used for all passenger car motor oils, heavy-duty motor oils, motorcycle oils and all other automotive lubricants.

But with the industrys increased attention on fuel economy, compatibility with emission control technologies, extended drain intervals and reduced viscosity, the PCMO market will see growth in friction modifiers and antioxidants, which will take larger shares of the market, along with viscosity index improvers, which will continue to hold the biggest share.

The same three components – dispersants, detergents and V.I. improvers – took up the largest slices of the pie for the HDMO segment in 2014.

However, the industry has shifted focus in recent years, and lubricants must be compatible with ultra-low-sulfur diesel and emissions control technologies such as exhaust gas recirculation and selective catalytic reduction. As a result, Kline predicts that consumption of antioxidants and corrosion inhibitors will increase in this segment, with a 2.5 percent higher growth rate than that of overall lubricant demand from 2014 to 2019.

Changes to formulations in industrial segments – which includes metalworking fluids, industrial gear oils, marine lubricants, railway lubricants and more – are driven by increasing severity of operations and extended service intervals, along with an uptick in the use of biolubricants such as vegetable oils and a significant increase in API Group II and Group III base stocks. Formulators will look to additive companies for help surmounting the challenges resulting from these developments, Phadke concluded.