Synthetic and semi-synthetic lubricants are marketed on the premise of offering superior performance for a higher cost. However, superior performance means different things in different products. This drives differences in the type of base stock used to blend lubricants for various applications.

In a recently completed study, Kline estimated the global demand for synthetic base stocks used to blend synthetic and semi-synthetic lubricants at 2.6 million tons in 2011. This estimate excludes consumption of Group III base stocks in non-technical applications on the basis of a price push. It also excludes non-lubricant applications like brake fluids.

The use of various synthetic base stocks is driven by how well their physical and performance characteristics meet application requirements. For example, Group III, gas-to-liquids, and polyalphaolefin base stocks are used primarily in automotive applications, with some minor use in general industrial oils and industrial engine oils. Their use in automotive applications is driven by their high viscosity indices, low volatility and low pour points.

These base stocks are rarely, if ever, used in metalworking fluids because their high viscosity index and low-temperature properties are not valued in metalworking applications. On the other hand, the low solvency and low sulfur content of these base stocks can be a performance drawback. Synthetic esters find application in practically all applications either as a blend component to provide solvency, low toxicity and biodegradability, or in metalworking fluids to provide antiwear and lubricity performance.

Poly alkylene glycols are used primarily in water-miscible metalworking fluids, hydraulic fluids and minor applications like chain lubricants. Other synthetic base stocks are used in specific niche applications where their physical properties play an important role.

Rapidly growing demand for synthetic and semi-synthetic lubricants will provide business opportunities for all synthetic base stocks. However, some will fare better than others due to performance differences and comparative costs.

Group III and GTL base stocks are currently the highest volume synthetic base stocks. These fluids are able to meet the technical requirements of most synthetic automotive lubricant formulations. Further, they are more readily available and competitively priced. As a result, consumption of these base stocks will enjoy strong growth.

The challenge that a Group III / GTL base stock supplier faces will be from other suppliers of the same product. Group III and GTL suppliers also have to focus on product development and approval projects to expand the technical boundaries of the markets they can supply. Improvements in Group III performance characteristics as well as additive technology will allow Group III and GTL suppliers to cater to new applications.

PAOs will continue to see demand arising from high-volume applications like fuel-efficient motor oils, and from growing consumption of widely cross-graded products. It is important that PAO marketers continue to document and communicate the performance capabilities of PAO versus lower-cost Group III/III+ in high-performance lubricants and in lubricants with challenging formulation requirements. High-viscosity PAO will also find opportunities in applications requiring unique viscosity profiles, excellent shear stability and good traction coefficients. This is particularly true in growth areas such as synthetic gear oils and novel viscosity grade motor oils. High-viscosity applications are an area of focus for PAO suppliers because Group III is not available in this range.

Opportunities for synthetic esters are expected in applications where environmental, health and safety considerations are important. These uses include biodegradable and non-toxic applications like fire-resistant lubricants and metalworking fluids. Non-traditional high-viscosity complex esters also have opportunities for growth as a formulating option in applications such as cutting fluids and industrial gear oils where they can displace less environmentally friendly components.

Demand from traditional end uses like aviation will continue to grow due to the growth in the aviation industry. Further, as the refrigeration industry shifts to non-ozone-depleting hydro-fluorocarbon refrigerants, polyol esters are the primary choice. Neopentyl-glycol, pentaerythritol and trimethy-lolpropane esters can all be used as refrigeration oils, and it is anticipated that the lowest cost options (and polyol ester blends) will be favored in this application.

PAGs will benefit from the growth of water-miscible metalworking and hydraulic fluids. As a result of new feedstocks and chemical manufacturing, PAGs may have numerous growth opportunities in lubricant applications. In particular, oil soluble PAG may have advantages as a blending stock alternative to synthetic esters, which would open the door for use in virtually all lubricant formulations and applications.

Similar to PAGs, alkylated naphthalenes have high potential for use as performance-enhancing blending stocks in synthetic lubricants, as alternatives to esters. While alkylated naphthalenes are not available in a wide range of viscosity grades, their hydrolytic stability and antiwear performance provide a clear advantage to esters in many formulations.

Polyisobutylenes are used in the lubricants industry as precursors for dispersants, as base stocks, as replacements for bright stock and as viscosity modifiers. Thus, PIB consumption is likely to continue its strong growth.

The market for phosphate ester fluids is mature, and their consumption will grow as key end-use industries grow. However, this growth will be offset by some loss of market share to cheaper alternatives like PAGs.

The remarkable thing about synthetic base stocks is that all categories are expected to experience strong growth. In addition, with the exception of PAOs, they should exceed overall demand growth of finished lubricants. Contrary to conventional wisdom, PAO demand is likely to show moderate growth due to two factors. First, high-viscosity PAOs will find use in high-performance industrial lubricants like wind turbine gear oils. Second, in low-viscosity automotive applications, PAOs are likely to retain their core application demand.

A price differential between PAO and Group III has existed for a long time. Blenders who are likely to shift from the former to the latter have already done so. Increasing Group III supply doesnt significantly alter the economics of blenders who continue to use PAO. The fact that certain applications continue to use PAO is due to some underlying technical need or because the cost of reformulating with Group III and obtaining original equipment manufacturer approval may be higher than the potential cost savings.

This is particularly true in Europe where the OEM approval bar is quite high. Klines outlook assumes that PAO will experience incremental losses to Group III for synthetic lubricant demand, but will not contract. In other words, many of the current automotive applications that are using PAO will continue to do so. New applications will increasingly favor Group III.