Who Dominates in Synthetic Stocks?


Experts say that nonconventional base stocks– meaning every kind except traditional solvent-refined mineral oils — account for less than 10 percent of the world’s lubricants. Volumes for these high-value materials tend to be measured in pounds, not barrels, and the top dogs are nearly always chemical companies rather than oil refiners. This makes each specialty its own exclusive club.

That was graphically demonstrated in Lubes’n’Greases‘ Nonconventional Base Stock Guide, published last month with the magazine’s U.S. edition. This colorful 33 by 22 inch wall chart shows the locations and owners of nearly 180 chemical plants worldwide that make the most widely used unconventional base stocks: esters, polyalkylene glycol, polyisobutene, phosphate esters, silicone oils, Group III mineral oils, and polyalpha- and poly internal olefins. Estimated capacities are shown for most plants as well, based on data from Pathmaster Marketing Ltd., company interviews and Lubes’n’Greases research.

At first glance, the map’s lesson appears demographic: Of 180 plants listed, only nine are located in the Southern Hemisphere. The more industrialized North, obviously, is where the lubricants are both made and consumed. Among individual countries Japan looms large, with 32 plants making nonconventional base stocks, but the United States has even more — 48 — and they tend to be larger in scale, as well.

While ExxonMobil is incontestably the single biggest refiner of conventional base stocks in the world, the oil giant and its affiliates are less overwhelmingin the world of synthetic and unconventional stocks. Few companies have a strong presence in more than one or two fluid types, the wall chart shows, and many of the plants have traded hands as the chemical industry continues to undergo rapid consolidation and realignment.

In terms of number of players, polyalphaolefin is the most concentrated of the base stock types, with just six companies making the stuff. BP’s Innovene subsidiary, with plants in Feluy, Belgium, and La Porte, Texas, holds 39 percent of the total capacity, chased by ExxonMobil Chemical with 31 percent at its two in Beaumont, Texas, and Gravenchon, France. Neste in Beringen, Belgium, and Chevron Phillips Chemical in Cedar Bayou, Texas, have 13 and 12 percent of the world’s PAO capacity, respectively. That leaves only 5 percent of this 392,000-metric-ton market to be shared by Chemtura, which makes high-viscosity PAO in Elmira, Ontario, and by Russia’s Nizhnekamskneftekhim, the newest member of this group.

Eighteen companies now make the high-purity, high viscosity index mineral oils known as API Group III stocks. South Korean refiners SK Corp. and S-Oil have 27 percent and 17 percent of the global capacity, respectively, but Chevron, ExxonMobil, Fortum and Motiva all have double-digit market shares, too.

Thanks to its merger in 2000 with Union Carbide, Dow Chemical is the undisputed heavyweight champ for polyalkylene glycol (PAG). Its six PAG plants have 38 percent of the world’s 690,000-ton capacity, far ahead of German chemical giant BASF, which ranks a distant second at 10 percent. Twenty-one other companies also supply PAG to the lubricants market, with major players including Chemtura, Clariant, Cognis, Huntsman, Pan Asia Chemical and Uniqema.

Polyisobutene, widely used in the form of PIB succinimides and succinates in manufacturing dispersant additive packages, is also used as lubricant base fluid and in electrical cable-filling compounds. Unsurprisingly, the leading additive companies hold much of this market. Innovene, the newly renamed BP Chemicals unit, holds 26 percent of the total capacity, giving it a slight edge here over Infineum, with 26 percent. The next-largest suppliers are Lubrizol (19 percent) and BASF (11 percent). That leaves nearly one-fifth of the market to be contested by eight other specialty chemical suppliers.

Currently, the material seeing greatest turnover of capacity ownership is phosphate esters. Chemtura, thanks to the merger of Great Lakes Chemical and Crompton, now has hold of 35 percent of the capacity, while Supresta lays claim to another 30 percent. Supresta is the new name for Akzo Nobel’s phosphorus chemicals business, sold in 2004 to private equity firm Ripplewood Holdings. Third-largest in this area is Bayer (10 percent), leaving nine others to divide 25 percent of the product’s supply side.

The chemical joint venture Dow Corning is the acknowledged leader in manufacturing silicone lubricant base stocks, which it makes at four locations in Europe, Asia and the United States. Another 12 companies manufacture silicone fluids, including GE Silicones, Rhodia and Wacker-Chemie, but none disclose their capacities. Less than 1 percent of silicone fluid, however, is ever used in lubricants, so technical and market knowledge — not nameplate capacity — is the deciding factor in this particular area, points out a source at Dow Corning.

Likewise, the capacities for manufacturing esters are pretty opaque. “It is usually not feasible or helpful to define plant capacity data for manufacturers of esters,” commented David Whitby of Pathmaster Marketing Ltd. in Surrey, U.K. “Almost all esters are manufactured in batch processes, with batch sizes ranging from less than one metric ton to about 20 metric tons. Manufacturing capacity can be increased or decreased to match customer or market demand simply by changing the batch sizes and/or scheduling more or fewer batches per day or week.”

Major players in the esters category, he indicated, include Cargill, Cognis, ExxonMobil Chemical, Hatco and Uniqema. Also, a number of companies operating ester plants, such as Quaker Chemical which has seven worldwide, consume their output internally. The Nonconventional Base Stocks Guide lists 52 ester plants owned by 28 companies in all.

“The 2005 Nonconventional Base Stock Guide lays all this out a colorful graphic format,” points out Nancy DeMarco, Lubes’n’Greases publisher. “It’s a reference that base stock buyers and base stock suppliers will turn to again and again, and an important companion piece to our 2005 Guide to Global Base Oil Refining.”

The Nonconventional Base Stock Guide was mailed to U.S. and Canadian subscribers to the print edition of Lubes’n’Greases, and to paid international subscribers, along with the August issue of the magazine. Additional copies are available; for information, visit http://www.LNGpublishing.com/base.htm.

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