Japan’s Group III Appetite Expected to Grow


OSTFILDERN, Germany – Like their counterparts in North America and Europe, Japan’s lubricant companies are struggling with a mature, low-growth market and growing technological and environmental demands.

Yet Japan, the world’s third-largest lubricants-consuming country, remains solidly rooted in conventional Group I, solvent-refined base oils, while use of Group II and higher base oils has blossomed in North America and Europe.

This is about to change, predicts Jinichi Igarashi of Nippon Mitsubishi Oil Corp., spurred by auto industry demands for engine oils that offer extended drains, high-temperature capabilities, emissions compatibility and above all, fuel economy.

By the year 2010, the fuel consumption of automobiles in Japan must be reduced by an average of 22.8 percent compared to 1995, he reports. This will only be possible by using very low-viscosity engine oils, such as SAE 0W-20. And these highly fuel-efficient 0W-20 oils can be formulated only when high quality Group III base oil are employed, he declared last week.

Speaking here at the 13th International Colloquium Tribology, Igarashi observed that some 80 percent of Japan’s 2.4 million kiloliter market is satisfied with Group I mineral oils. Hence, the vast majority of Japanese base oil capacity is still aimed at the production of Group I base oils. Meanwhile, in North America, Group II and II-plus base oils have shown tremendous growth since the mid-1990s, and about half of the paraffinic base oil capacity has been converted from Group I to Group II or higher.

These dramatic changes are the result of significantly increased performance requirements within the automotive industry, such as ILSAC GF-3 [engine oils]. In Western Europe, even more severe performance requirements from the automotive industry have led to a rapid increase in the demand for very high viscosity index Group III base oils and synthetic PAOs. Together, he added, these have grown to 10 percent of Europe’s base oil market.

By contrast, he drew a rather static picture of Japan’s lubricants market. Overall, it averages 2.2 million to 2.4 million kiloliters per year, a volume which has remained stable for the past decade. Automotive lubricants represented about 32.8 percent of total sales in 2000, while marine lubricants accounted for 10.7 percent, and industrial lubricants for 47.9 percent. Process oils account for the rest.

In the automotive segment, gasoline engine oils are 41 percent of Japan’s market, diesel engine oils 37 percent, and automatic transmission fluid 12 percent. Gear oils, hydraulic fluids and other products account for the remaining 9 percent.

As recently as 1999, large amounts of lower-quality grade oils such as SH and SG were still being sold in Japan, Igarashi told the Colloquium at the Technische Akademie Esslingen. On the heavy-duty diesel side, 60 percent of engine oils met only API CD quality, and 70 percent were monograde. This peculiarity of the Japanese diesel engine oil market was caused by economic factors and by diesel engine designs that require different oils than the U.S. A new diesel engine oil classification, JASO DH-1, took effect last April, and eventually should dislodge the CD and monograde diesel oils from the market.

Certainly, Japanese refiners have waited a long time to see the market embrace higher quality base oils. Idemitsu Kosan installed a hydrocracker at its Chiba refinery in 1969, and was an early leader in making water-white, sulfur-free Group II base oils.

Since 1993, Japan Energy Co. has had capacity to make Group III oils with a viscosity index of 140 or even higher (albeit in limited volumes), using its own hydroisomerization technology for slack wax. And Nippon Mitsubishi, one of the world’s 10 largest lubricant suppliers – created in 1998 by the merger of Nippon Oil and Mitsubishi Oil – has more than a decade of experience with Group II and III base oils.

The combined production capacity of VHVI base oils at our Yokohama and Mizushima refineries well exceeds 100,000 kiloliters per year, accounting for about 90 percent of total VHVI capacity in Japan, said Igarashi.

Fuel economy demands, in particular, are expected finally to propel these oils more deeply into the marketplace. Ford Motor Co. research cited by Igarashi indicates that 0W-20 engine oil can increase fuel economy by up to 3 percent over 10W-30 (currently Japan’s most popular engine oil grade).

However, in order to [make] 0W-20 engine oil, the base oil must be Group III, or Group IV (polyalphaolefin). Another driver will be the use of organic molybdenum as a friction modifier. With molybdenum, you can gain friction reductions of up to 10 percent at low engine speeds. However, a big drawback is the loss of effect over time; the friction reduction is lost quickly due to additive depletion. By using Group III or polyalphaolefin base oil, there is better retention of the friction reducing properties, due to the oils’ better oxidative stability, Igarashi explained.

If these requirements hold, he expects Group III base oils will capture some 10 percent of Japan’s engine oil market by the year 2010, a big step up from about 3 percent today.

Related Topics

Market Topics