The worlds largest lubricant market should resume growing over the next five years, albeit slowly, according to a new study by a market research firm.
Freedonia Group said Monday that it expects lubricant volume demand in the United States to grow an average of 0.9 percent per year through 2010. That would represent an improvement over the past five years, when demand declined an average of 0.2 percent.
The study, titled Lubricants, has a sunnier outlook for the revenue reaped from lubricants. It predicts the value of U.S. lubricant consumption will rise an average of 3.3 percent to $13 billion in 2010.
According to Freedonias estimates, U.S. sales of finished lubes totaled 2.74 billion gallons (9.3 million metric tons) last year, down from 2.76 billion gallons in 2000. It forecasts demand rising to 2.86 billion gallons in 2010.
The volume growth projections stem partly from expectations that increased manufacturing activity will drive higher demand for industrial lubricants. The Cleveland-based firm said process oil consumption will grow 1.8 percent annually to 547 million gallons by 2010, and that demand for general industrial oils will rise 0.7 percent to 331 million gallons.
The study also forecasts increased demand for automotive lubricants, due to growth in the number of vehicles and the average distance traveled by each vehicle, but it added that those trends will be partially offset by longer drain intervals for engine oils and automatic transmission fluids. Overall the study projects engine oil demand growing 0.9 percent annually to 1.48 billion gallons and consumption of transmission and hydraulic fluids shrinking 0.2 percent per year to 269 million gallons.
The study said heavy-duty engine oils will grow fastest within the automotive segment, while food-grade lubes are expected to set the pace in the industrial segment.
Freedonia said its 3.3 percent growth projection for lube sales revenues is significantly lower than the pace of increase over the past five years, which was mostly driven by the sharp run-up in costs for crude oil and oil products. The company expects crude prices to drop by 2010 but predicted that lube prices will rise as users shift to higher quality products.
The lubricants study (Study Number 2097, published August 2006, 346 pages) presents historical demand data and forecasts for finished lubricants and base oils; reviews market factors; evaluates company market shares; and profiles major industry players. The cost is $4,400.