HOT SPRINGS, Va. – Global demand for greases used in industrial applications is expected to remain nearly flat through 2019, Annie Jarquin of Kline & Co. reported at an industry meeting on Monday.
The overall outlook to 2019 shows only minimal overall volume growth; therefore, businesses need to focus on value and segment growth, she told attendees at the National Lubricating Grease Institute Annual Meeting. In a flat market, companies must focus on their key strengths and capabilities in order to maximize profitability and enable growth in specialty segments.
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According to the Kline report Jarquin cited, the global grease market in 2014 was 1.3 million tons, 52 percent of which was consumed in the industrial segment. Commercial applications accounted for 37 percent, and the remaining 11 percent was sold in the consumer market.
The primary metals industry took a quarter of the 677,000 tons of global industrial grease consumed in 2014. Mining demanded 15 percent, followed by off-highway applications (11 percent), general manufacturing (9 percent), transportation equipment (6 percent) – including highway, marine, aviation, railway and others – power generation (5 percent), oil and gas (3 percent), cement and food and beverage each at 2 percent, and pharmaceuticals at 1 percent. The remaining 21 percent was used in other applications.
The Asia-Pacific region consumed nearly half (47 percent) of that 677,000 tons, followed by Europe (20 percent), North America (19 percent), South America (8 percent) and the rest of the world (6 percent).
The share of thickener types has stayed constant for the past few years, though regional differences can be seen. Increasing lithium prices are encouraging a change to alternative thickeners, Jarquin pointed out. Despite this, lithium remains the worlds most popular thickener, used in 74 percent of the industrial grease produced in 2014. Calcium came in second at 11 percent, followed by polyurea (5 percent), aluminum (3 percent), clay (2 percent), sodium (1 percent), other soaps (2 percent) and non-soap thickeners (2 percent).
Asia-Pacific was most fond of lithium greases, slathering 77 percent of their applications with the category of products. Calcium was the second most popular type of thickener in the region, being contained in 9 percent of the greases consumed there, followed by polyurea at 7 percent. Other choices accounted for less than 2 percent each. Europe used lithium in 70 percent of its greases, calcium in 13 percent, polyurea in 5 percent, aluminum in 3 percent and other soaps in 4 percent. Sixty-eight percent of North Americas greases were thickened with lithium greases, followed by calcium (12 percent), polyurea (6 percent), aluminum (6 percent) and clay (4 percent), with other choices thickening 2 percent or less of the regions remaining grease.
Over the next five years, the compound annual growth rate for industrial grease demand will be a measly 0.3 percent, according to Klines prediction, bringing global consumption to 691,000 tons in 2019.
That scant amount of growth is expected to be spread across a range of industries. Kline forecasts the primary metals industry to consume 26.2 percent of industrial greases in 2019, followed by mining (14.9 percent), off-highway transportation (11.7 percent), general manufacturing (9.5 percent), transportation (6.7 percent), power generation (5.6 percent), cement (2.6 percent), food and beverage (1.9 percent), pharmaceuticals (1.4 percent), with other applications accounting for 19.5 percent. While pharmaceuticals will show the largest percentage increase, it will remain a very small segment of the market.
Geographic distribution is expected to change very little. Slow industrial activity will keep consumption largely flat in Europe and North America, Jarquin said, with a small increase in the European market driven by recovery from the Eurozone crisis rather than actual economic growth. North America is expected to see a slight decline. Demand in Asia-Pacific will also remain flat – or possibly decline slightly from current levels – thanks to a slowdown in Chinas primary metals manufacturing industry. The fastest growth will occur in the rest of the world, with South America leading the pack.
Through 2019, North America is expected to see a 0.6 percent compound annual decline from its 2014 level of 129,000 tons. Meanwhile, Mexico will show slight gains. More than 90 percent of North American demand is in the United States and Canada.
Key U.S. industries are mining, which accounted for 19.9 percent of the national market in 2014, and primary metals (12.9 percent), but these are mature markets growing at a slower rate than the countrys overall economy, Jarquin explained. Off-highway applications accounted for 16.3 percent that year, followed by general manufacturing (11.6 percent), transportation equipment (10.3 percent), power generation (6 percent), oil and gas (4.7 percent), food and beverage (3 percent), pharmaceuticals (1.2 percent), cement (0.4 percent) and other industries (13.6 percent).
Lithium complex greases continue to replace simple soap products in North America, said Jarquin. Some movement from clay and lithium complex greases toward polyurea greases is also expected in electric motor and other high temperature applications.
Biobased greases have achieved little penetration in North America, which uses mineral base oils for 93.1 percent of its grease base stocks. Six and a half percent of the markets greases are synthetic or semi-synthetic, and only 0.4 percent is biobased products. Kline expects mineral base oil to continue its lead in both soap and non-soap based greases. Use of synthetic products based on polyalphaolefins and diesters will increase in general manufacturing, the paper industry and aerospace, the consultancy predicts. Biobased greases are not expected to show much growth in this region over the next five years.
Europe consumed 134,000 tons of industrial greases in 2014, and recovery in the Eurozone brings a forecast of 0.6 percent growth through 2019. However, the United Kingdoms impending referendum on European Union membership has affected the industry somewhat, Jarquin said, bringing uncertainty of what the political and economic future holds.
Key European country markets are Germany, Switzerland and Austria, which have large automobile, chemical, machinery and primary metals manufacturing industries. These three countries, along with Russia and Turkey, make up 50 percent of regional demand volume.
The primary metals industry sucks 20 percent of the regions lubricating greases, followed by off-highway transportation (13 percent), general manufacturing (11 percent), mining (10 percent), transportation equipment (6 percent), power generation (6 percent), chemicals (4 percent), food and beverage (3 percent), pharmaceuticals (2 percent), cement (1 percent) and the remaining 24 percent in other applications.
The regions demand is increasing for better-performing, more expensive greases such as polyurea, lithium complex and calcium complex products, at the expense of simple soap greases. Russia also continues its shift toward high-performance greases, Jarquin said. The countrys demand is increasing for lithium complex greases, as well as calcium complex products that can perform in metallurgical equipment up to 150 degrees Celsius.
Eighty-nine percent of the greases used in Europe are made with mineral base oils, while 8 percent are synthetic or semi-synthetic, and 3 percent are biobased greases. The region is slowly shifting toward synthetic greases for applications such as electric motors, fan bearings and other fill-for-life applications like wind turbines, said Jarquin. Demand for synthetics is higher in Northern Europe because of low-temperature performance requirements in that area. Use of biobased greases is increasing across Europe, especially compared to other regions. Synthetic ester biobased greases are primarily used for sensitive applications such as water purification, water locks, agriculture and forestry because of performance demands.
Asia-Pacific consumed 321,000 tons of lubricating greases in 2014 – almost half of global demand. Half of the regions demand was driven by China, followed by Japan, India, South Korea, Indonesia, Thailand and Taiwan. The top five country markets account for 90 percent of regional demand.
Primary metals dominate industrial grease demand in Asia-Pacific at 35 percent, above mining (13 percent), off-highway (9 percent), general manufacturing (7 percent), transportation equipment (6 percent), power generation (4 percent), cement (4 percent), oil and gas (1 percent), food and beverage (1 percent), pharmaceuticals (1 percent) and other industries (19 percent). In China, the primary metals and off-highway transportation industries consume the most grease. Transportation equipment manufacturing and general manufacturing, especially fabricated metal products, top the list in Japan. Indias key industries are primary metals, transportation equipment manufacturing, off-highway transportation, cement and general manufacturing, and the country is seeing a trend toward high-performance synthetics in select applications. Polyurea has made inroads in the steel industry.
Asia-Pacific prefers mineral oil based greases, to the tune of 93 percent. Growing production of API Group II and Group III base oils is leading to better performing greases being used in the region, Jarquin stated. Synthetics and semi-synthetics make up 6 percent of the regional market, and biobased stocks have only 1 percent. Japan and Australia are the predominant users of biobased greases. Synthetic greases in the region are used primarily in severe applications such as steel mills, wind turbines and food processing.
The Kline & Co. report is titled General Industrial Oils and Grease: Global Market Analysis and Opportunities.