While mineral-based products account for the majority of demand in the global industrial oils and greases market, the share of synthetics continues to creep upward, reported Kunal Mahajan, project manager for energy at Kline & Co. consultancy. This is because of extreme operating conditions, original equipment manufacturer recommendations and the realization by end users of the benefits of using synthetic products, he said in a September webinar.

Extreme operating conditions are becoming the norm in many industries. As modern gearboxes get smaller, increasing temperatures require better performance from less oil. Increasing pressure and temperatures in power generation equipment demand better lubricant performance at high temperatures. Changing velocity throughout the day puts increased stress on wind turbines, and higher numbers of off-shore installations create the need for longer drain intervals.

What these extreme conditions essentially mean, summarized Mahajan, is that end users will look to adopt much better products than they have been using so far. Synthetic products are especially popular in refrigeration and compressor oils, one of the top five product categories in the industrial market, according a Kline study titled General Industrial Oils and Grease: Global Market Analysis and Opportunities.

Refrigeration and compressor OEMs are offering extended warranties of six to ten years for users of synthetics, Mahajan reported. Once customers have experienced the benefits offered by synthetics, they tend to continue using those products. Additionally, synthetic refrigeration oils are more compatible with environmentally friendly refrigerants, which manufacturers are adopting more and more.

In addition to factors like operating conditions and equipment design, Kline expects that growth in industrial oil and grease demand will be lifted by global economic tides – a rise of 3.8 percent compound annual growth is expected through 2019 – government regulations and value-added services.

Offering services like fluid management and use of recycled and rerefined oils provide opportunities for suppliers and distributors to stand out in the marketplace. But these services, combined with greater use of synthetics, may also help slow demand growth overall, Kline reported.

Other challenges to growth include consolidation in some end-user industries, which is likely to result in rationalizing of suppliers. Furthermore, Mahajan said, end users are looking to cut costs any way they can. This means adopting better maintenance practices and fluid management services that reduce overall lubricant consumption.

In terms of regional demand, Mahajan related that the relative share of different products in different regions is quite similar. The exception is hydraulic fluids, which have a slightly higher market share in what the report terms the rest of the world – essentially the Middle East and Africa. Here, hydraulic fluid buyers like oil and gas, mining and construction-related industries have a higher share in regional economies.

Another regional difference can be seen in the rate of adoption of synthetics. Because of the higher price of synthetic products, the use is more prevalent in developed economies such as Europe, in contrast to developing economies like the Middle East and Africa.

Going forward, all regions can expect growth in demand for industrial oils and greases, with the highest increases forecast for Africa, the Middle East and South America. The study predicts demand in these regions will grow at a rate of about 1.75 percent, compared to around 1 percent in Europe, North America and Asia-Pacific. Kline also anticipates the growth rate for synthetics will continue, and will be much higher than that for mineral-based products across all categories.