During a 29 June webinar, Milind Phadke, India-based project manager for Klines Energy Practice, said Europes metalworking fluid market is projected to grow by 1 percent per year, from 601,000 metric tons in 2010, to more than 630,000 tons in 2015. The firm expects a similar turnaround in North America, noting that both regions are placing renewed emphasis on manufacturing.

Coming out of the recession, many of the governments in both North America and Europe are focused on shifting their economy from being overly dependent on financial and other services, and retaining whatever manufacturing strengths they have, Phadke said.

Germany, Russia Lead the Way

Since 2007, the last time Kline conducted the study, Europes metalworking fluid demand slipped 1.8 percent per year. Metalworking fluid consumption in Europe – including Western, Central, and Eastern Europe and Russia – totaled 601,000 tons in 2010, down from around 634,000 tons in 2007. The market did decline due to the recession, but the overall decline was not as bad as one would expect, Phadke said.

The top five country markets in Europe for metalworking fluids consumption in 2010 were Russia, which consumed 23 percent of the regional total, Germany, with 21 percent, France, 11 percent, Italy, 9 percent, the United Kingdom, 8 percent and Spain, 6 percent. Other Eastern Europe countries accounted for 14 percent, and other Western Europe countries for 8 percent.

The European metalworking fluids market weathered the storm largely because of Germany and Russia. Both of them have seen a rebound in manufacturing, Phadke noted. In the case of Germany, this has been due mainly to exports to Asia. In Russia, its more due to internal demand linked to appreciating energy prices.

Metalworking fluid use by end-use industry included transportation equipment (40 percent), fabricated metal products (25 percent), machinery (13 percent), primary ferrous (10 percent) and primary non-ferrous (6 percent). The two largest end use segments include transportation equipment, which is mainly automotive manufacturing, and fabricated metal products, which includes production of tools, general hardware, boilers, radiators and other such equipment, Phadke said.

In terms of product type, Phadke said European consumption of removal fluids accounted for 335,000 tons, or 56 percent of the total, in 2010. He noted this contrasts with both North America and Asia, where removal fluids accounted for about 25 percent of the total demand.

Supplier Breakdown

Klines study found the European metalworking fluid market extremely fragmented, with the top 10 suppliers accounting for just 63 percent of the market. The top suppliers in Europe in 2010 included BP Castrol Industrial (10.5 percent), Fuchs (10 percent), Houghton (9.9 percent), Quaker Chemical (8.2 percent), Shell (7.2 percent), Henkel (4.3 percent), Total (4.2 percent), ExxonMobil (3.8 percent), Carl Bechem (2.9 percent), Petrofer (2.3 percent), Blaser and Cimcool (2 percent each) and Zeller & Gmelin (1.9 percent). Houghtons share includes D.A. Stuart volumes, but not the 2011 acquisition of Shells metalworking fluids and metal rolling oils business. Shells share also doesnt reflect the sale of that business.

Phadke noted that the metalworking fluid suppliers in Europe all have different areas of focus and strength. BP Castrol, Fuchs, Houghton are strong in removal fluids, he noted. Quaker and ExxonMobil are strong in rolling oils. Fuchs is strong in protecting fluids. Houghton, Fuchs and Petrofer are strong in treating fluids.

We also see that some suppliers sell across Europe, while many of them focus mainly on their home markets, Phadke continued. Obviously, having an international reach is an important advantage, especially when customers move from the high-cost markets in Western Europe to low-cost markets in Eastern Europe and even beyond

Europe.

In the removal fluids market, Kline found that Europe is going in one direction, while North America and Asia are going in another in terms of the type of products that are used. Europe desires to use greater amounts of neat oils in their compositions as opposed to North America and Asia, which are trying to increase the use of water-miscible fluids, he said. According to Kline, European users are especially likely to use neat oils for new installations.

He noted that neat oils – which generally consist of a mineral oil base stock and chemical additives – are considered easier to maintain, have a longer tank life, and are easy to recycle. Alternatives are water-based fluids. In the case of water miscible fluids, the cost of testing of the effluent and treating of effluent can be quite prohibitive, Phadke explained. Due to the stringent environmental regulations in Europe, customers are trying to increase the usage of neat oils.

However, the recession has made everyone quite cautious, he added. This changeover is not happening so much in existing facilities because the cost of retrofit and additional equipment can be quite expensive, Phadke said. As new manufacturing plants are added, we see that there could be a preference for neat oils as compared to water miscible fluids.

Formulation Shifts

Besides this shift in product types, Kline also found a shift in formulations for removal fluids, both in terms of the type of base stock that is used, as well as the additives that are used due to health, safety and environmental factors.

In the base oil market, the availability of [API] Group I is declining, and that is impacting the formulation of these removal fluids and in fact all metalworking fluids, Phadke said. The use of Group I is declining, and the use of various hydrocracked base stocks – Group II and Group III – is increasing. This of course brings its own pluses and minuses. Group I base stocks have a higher solubility, so they are able to solubilize the additive package more easily. On the other hand, the hydrocracked base stocks have a higher viscosity index, they also have a lower propensity for misting, and that can be a plus point.

He noted that suppliers of naphthenic base stocks are also trying to reenter the metalworking fluids market. [Naphthenics] were used in the past, and then their use came down, Phadke said. They are again trying to enter the market. Suppliers of vegetable oils are also trying to penetrate formulations used in metalworking fluids.

Other removal fluid trends include growing use of multipurpose oils and growth in new machining technologies driving a reduction in volume of fluid consumption.

Phadke said important trends affecting demand for forming fluid additives include a general shift away from chlorine-containing additives, changes in biocide use, development of biostable fluids, mist abatement and other health and safety issues similar to those facing removal fluids.

He noted a move away from graphite in the market, with synthetic polyalkylene glycol based fluids making inroads. Graphite remains widely used in oil and in water forging fluids, but poses serious housekeeping issues, Phadke noted.

Also growing is usage of synthetic ester based rolling oils for improving reproducibility and improving throughput of rolling mills.

Cleaning Up Forming

As with removal fluids, the forming fluids market is seeing increased usage of multipurpose oils, Phadke said. Examples include pre-lubes, such as anticorrosion and stamping fluid, and washing fluids that also function as pressing lubes.

In protecting fluids, Kline sees decreasing use of solvent based protecting fluids to reduce volatile organic compound (VOC) emissions. The use of synthetic and soluble oils and solvents with boiling points above 250 degrees C has instead increased. Vapor phase corrosion inhibitors continue to penetrate the protecting fluids market. Cleaners are increasingly used to provide corrosion protection as companies rethink their metal-cleaning practices to reduce VOC, according to Phadke.

In treating fluids, efforts to reduce fire hazards, smoke generation, mist levels and fuming, along with desires for longer tank life are driving the increased use of water-miscible synthetic fluids. Phadke said PAGs, sodium acrylate-based polymers and polyvinyl pyrrolidone are all growing but PAGs continue to dominate the market.

For applications in which water-soluble synthetics arent suitable, synthetic ester and canola oils have made minor inroads.

The growing popularity of gas quenching as an option could impact the treating fluids market. Gas quenching is something end users have talked about, used mainly for small sized jobs like production of roller bearings, cutting tools, and other high-temperature tempered parts, with multiple advantages, Phadke said. Its use is increasing, and it would mean a negative trend for metalworking fluids because there is no metalworking fluid consumed in these operations.

Klines report is titled Metalworking Fluids 2010 Global Series: Market Analysis and Opportunities.