In the U.S., Frost & Sullivan said total metalworking fluids revenues will be $909.4 million for 2006, and will increase to $988.7 million by 2013. The annual revenue growth rate is about 1.6 percent in 2006 and is projected to be 1.2 percent in 2013.
Sreeram Raghuram, research analyst for specialty chemicals for Frost & Sullivan, said earlier this month the fragmented metalworking fluids market provides a huge scope for consolidation opportunities but that so far it is not happening fast. Regulation is also becoming important, especially in European countries.
Niche market applications look the strongest growth area at the moment, and companies who have excellent product development capabilities serving a specific set of customers are expected to benefit, Raghuram said.
Frost and Sullivans analysis highlighted several trends:
- Geographical movement of end users such as automotive majors. In the U.S., end users are leaving the country to open facilities in Mexico, China and India. In Europe, movement of end users to eastern European countries (apart from movement to China and India) has slightly offset the slowdown in the western European economy.
- Catching up of alternative technologies such as dry machining and micro lubrication in the U.S. and Europe.
- More companies looking at lubricants based on vegetable oil bases as a serious alternative for petroleum based lubricants in both the U.S. and Europe.
- Stringent legislation in Europe which intends to ban compounds having chlorine, boron and amines.
Raghuram said the metalworking fluids market faces a variety of needs, among them:
- Need for products to conform with customer specifications.
- Need for biostability of soluble oils to ensure longer fluid life, reduced overall costs and worker safety.
- Need to concentrate more on service in the wake of geographical relocation of customers.
- Need for continuous product improvement capabilities to maintain performance and conform to regulations. He said regulation is especially important in European countries.
He said the introduction of high speed machining represents a shift from more traditional machining methods. Technology advancements in equipment and processes in various end applications require customization to fit individual needs, Raghuram said. This poses considerable challenges under the stagnant demand for metalworking fluids in the United States.
Frost & Sullivan is an international market research firm based in Palo Alto, Calif.