Study: U.S. Lubes Market to Grow


Recent spikes in oil prices and increased environmental regulations have injected renewed interest into alternative base stocks such as synthetics, rerefined oil and bio-based oils, said Freedonia Group Inc. analyst Diane Wilkoff, noting a key finding in Lubricants, a new U.S. market study from the Cleveland-based market research firm.

Synthetics are expected to continue to comprise the largest portion of these sales, but bio-based oils are expected to grow faster, due in part to governmental incentives and improved performance of these products, Wilkoff told Lube Report.

Freedonias study forecasts U.S. demand for lubricants will edge up 0.8 percent per year to 2.5 billion gallons in 2012, after declining 1.8 percent per year between 2002 and 2007. Volume gains will be restricted by trends towards longer-lasting lubricants that extend oil drain intervals and reduce overall lubricant requirements, the firms research suggests.

Demand for engine oils, accounting for almost half of total U.S. lubricant demand in 2007, will gain a boost from an increasing number of motor vehicles in use, the study predicts, although it will be offset somewhat by trends towards smaller automobiles and less frequent oil changes.

The do-it-for-me engine oil change market will continue to benefit from the decline in the do-it-yourself market, the report anticipates, as aging baby boomers continue to change sectors. Dealerships will likely benefit the most from the switch, the study concluded, as they use oil changes as a loss leader to attract customers for more profitable repair work. Freedonia also anticipates above average oil demand from the agricultural sector and construction industry.

Growth in the manufacturing sector will fuel demand for industrial lubricants such as hydraulic fluids, process oils and greases, the report projects, forecasting growth of 0.6 percent per year to 335 million gallons in 2012.

Wilkoff said demand for greases is forecast to remain flat through 2012 at 53 million gallons. The market will be supported by growing manufacturing activity but demand will continue to be limited by market maturity and the rise of sealed-for-life components, she continued. Competition from other lubricating products which are increasingly being used in place of grease will also limit demand.

The analyst added that demand for synthetics and environmentally friendly products will grow relative to conventional petroleum-based grease. For example, in traditional applications such as gear lubrication in the automotive sector, synthetic gear oils and high-viscosity gear oils are beginning to replace grease, Wilkoff said. In addition, grease is losing market share to oil in industrial settings. In many manufacturing applications, grease and oil are interchangeable. And, as manufacturers try to minimize the variety of lubricants they need on site, some OEMs are choosing oil, which can have wider applications, over grease.

Increasing production of transportation equipment and industrial machinery will drive demand for industrial lubricants over the next five years, according to Wilkoff. In the area of transportation equipment, motor vehicle and aircraft equipment are expected to see the largest gains as both sectors rebound from their poor performance in 2007. Lubricant demand in industrial machinery production will also be driven by strong growth for electrical power equipment, which consumes large quantities of lubricants, and increasing demand for mining and oilfield equipment.

The study predicts a reversal in fortunes for transmission and hydraulic fluids demand, which are expected to increase from 288 million gallons in 2007 to 295 million gallons in 2012. Factors helping the reversal in demand will be an increase in the number of motor vehicles produced and the fact that sales are increasing from a very weak 2007 base, when high oil prices prompted consumers to put off oil changes when possible, exaggerating other trends that had already been increasing oil change intervals, the analyst explained.

Freedonias research suggests demand for process oils will lag overall lubricant demand, growing about 0.4 percent per year to 460 million gallons in 2007. That includes white oils, rubber oils, electrical oils, ink oils, agricultural spray oils and defoamer oils, among others. Some weakness in key markets such as cosmetics, toiletries and inks will likely dampen gains from process oils getting incorporated into finished products, the study suggests.

U.S. Lubricant Demand (millions of gallons)


Annual Growth Percentage







Total Demand






Engine Oils






Process Oils






General Industrial






Transmission and Hydraulic Fluids






Other Lubricants






Source: The Freedonia Group Inc.

The 369-page Lubricants study is $4,700 from The Freedonia Group. For more information, visit

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