Finished Lubes

There is widespread consensus regarding the top global finished lubricant suppliers. Multiple sources agree on the ranking of Shell as the number one lubricant marketer in the world. Rounding out the top five are ExxonMobil, BP-Castrol, Total and Chevron. The graph on Page 24 plots the relative market share of the top 20 suppliers, and the table on Page 22 tracks how the landscape has shifted over the past five years.

According to Apu Gosalia, vice president of sustainability and global competitive intelligence at Fuchs Petrolub SE in Mannheim, Germany, the top 20 lubricant suppliers account for about two-thirds of the worlds total lubricant supply. The top 10 account for about 50 percent of supply. Here are highlights for each company.

Shell has been number one by lubricants volume on Kline & Companys list for nine straight years. It has seven base oil plants, 15 grease plants and almost 50 lubricant blending plants worldwide, and employs over 10,000 people – about one in nine of the Shell Group. It has major technology centers in Europe, the U.S. and China, and owns leading brands such as Shell, Pennzoil, Rotella, Helix, Quaker State and others. Its top-tier lubes use natural gas-to-liquids base oils made at the Pearl joint venture plant in Qatar.

ExxonMobil reported record sales for its flagship products in 2015. The company also completed lubricant plant expansions in China and Finland. In 2016, it will start up a facility in Baton Rouge, Louisiana, U.S., that will blend and package aviation lubricants. Its lubricant plant expansion in Singapore is expected to start up in 2017 and will be the only site to blend Mobil 1 motor oil in Asia Pacific. Also the worlds largest refiner of base oils, XOM is building an API Group II plant in Rotterdam, due in 2018.

BPs lubricants business, including BP, Castrol and Aral brand products, delivered an underlying profit of U.S. $1.38 billion before interest and tax, up from 2014 and 2013. The 2015 results reflected strong performance in growth markets and premium brands, it said, as well as lower costs from simplification and efficiency programs. These factors contributed to around a 20 percent year-on-year improvement in results, which was partially offset by adverse foreign exchange impacts.

Totals lubricant sales grew by 3 percent in 2015, and volumes reached 39,000 b/d (including finished lubricants and base oil). Demand is expected to be driven by the Asia-Pacific region, which already represents one-quarter of sales. The companys blending plant in Singapore, inaugurated in July 2015, is its largest worldwide, with a capacity of 310,000 metric tons/year. Also in 2015, Total Lubricants signed an aftermarket partnership with Tata Motors to supply high performance lubricants for commercial vehicles across Tatas sales and service points.

Chevron markets lubricants under its flagship Chevron, Texaco and Caltex brands for commercial, industrial, consumer and marine customers. In 2015, the company secured new customers in key growth segments, including commercial fleet, construction, mining, power generation, and oil and gas, among others. Its premium base oil capacity amounts to 57,000 b/d; it has 18 equity blending plants; and principal R&D centers are in Belgium, the U.S. and Singapore.

Petrochinas sales volume fell by 1.15 million tons in 2015, down 23 percent from 2014. The state-owned energy giant has long been a major player in China, and its business suffered when that market shrank last year. PetroChina and Sinopec supply almost one-half of Chinas lubricant demand, and PetroChina is also Chinas largest base oil producer.

Sinopec felt the impact of last years contraction in its domestic market, but it has focused more in recent years on overseas expansion. In 2013, it opened a 100,000 ton per year blending plant in Singapore to produce products for foreign markets. Domestically, Sinopecs sales network is strongest in the southern half of the country, while PetroChinas is stronger in the northern half.

Idemitsu Kosan is the largest Japanese lubricant supplier, and it reported lubricant sales of 1.1 million tons for the 2015 fiscal year ending March 31, 2016, an increase of 6 percent. The companys lube business has been growing thanks to overseas growth, which has included formation of a joint venture in India, construction of a blending plant in Vietnam, expansion of its main blending plant in China and creation of a regional headquarters in Singapore. By April 2017, Idemitsu plans to acquire and merge with Showa Shell Sekiyu, Shells unit in Japan, which also has lubricant holdings.

Fuchs Petrolub, wholly focused on lubricants, outranks many integrated majors. The publicly held company (54 percent owned by the Fuchs family) offers automotive and industrial lubricants, metalworking fluids, greases and other specialties. Fuchs acquired Deutsche Pentosin-Werke GmbH and Statoil Fuel & Retail Lubricants in 2015, and this year snapped up Chevrons U.S. food-grade lubricants business. Its sales revenue exceeded 2 billion for the first time in 2015, and earnings hit 236 million.

Petronas Lubricants International has sales offices in 23 countries, capacity to make 613,000 metric tons/year of lubricants at 11 blending plants worldwide, and strong OEM relationships that anchor its business. Owned by Malaysias national oil company, PLI acquired FL Selenia in Italy for 1 million in 2008 and since has pushed deeply into Europe, Africa, the Americas and China. After sales amounting to 739 million liters and $1.66 billion in 2014, it saw lower volumes in 2015 yet recorded higher profitability through stringent cost control, lower base oil costs and deferred taxes in Italy.

Lukoil has focused on developing its premium business segments by concentrating on the production of high-margin lubricants, particularly marine lubricants. The company is the leading Russian producer with 45 percent share of the countrys lubricant market. Its share of the global marine lubricant market increased from 5 percent in 2014 to 9.5 percent in 2015.

JX Nippon Oil & Energy leads Japans finished lubricant and base oil markets, claiming 32 percent of Japans finished products market. It also owns four base oil plants with combined capacity of 740,000 metric tons per year and is part owner of other plants. It is striving to expand overseas while coping with a contracting domestic market. The company reported total lube sales of 500,000 liters in 2013 with a goal to reach 710,000 liters last year. Sales volumes will get a further boost if it completes its proposed merger with TonenGeneral Sekiyu KK.

Valvolines revenues dipped slightly, to just under $2.0 billion in the fiscal year ended September 30, 2015, while earnings before interest and taxes rose 14 percent to $411 million, thanks to lower raw material costs. Lubricant sales, 73 percent of which are in North America, increased to 167.4 million gallons versus 162.6 million gallons in 2014. Parent company Ashland Inc. aims to split off Valvoline as a separate company before the end of 2016, beginning with a public offering of 20 percent of Valvolines stock.

Gulf Oil International, part of Indian conglomerate Hinduja Group, has seen its lubricant business grow domestically and abroad. India is its largest market, and the company reported that sales volumes there jumped 10 percent in 2015-2016 to 75,000 kiloliters. Growth was across the board but particularly strong in the motorcycle segment. Elsewhere the company continues to enter new markets as it leverages its historic brand name. It now operates blending plants in Argentina, Saudi Arabia and China and is building a global presence in the marine segment.

Pertaminas total sales volumes for fuel and lubricant products in 2015 were lower than those in 2014. While economic conditions may have been the primary factor for the decline in sales volume, increasing market competition was also a factor behind the decline. Lubricant volume was 460,000 kiloliters, slightly higher than in 2014. In December 2015, the company started Phase I start-up of a production unit in Jakarta, with a capacity of 250 million liters per year. Pertamina is turning its attention to foreign markets as it attempts to continue its growth spurt. It claims a 59 percent stake of the Indonesian market.

Gazprom Neft said it boosted lubricant sales by 21 percent last year, thanks to Russias import substitution program, which promotes the purchase of domestic products. Sales of premium products in foreign markets increased 35 percent, meanwhile, compared to 2014. Despite an overall 5 percent decline in the Russian markets demand in 2015, the company increased its market share to 14 percent (up 3.5 percent vs. 2014).

Phillips 66 Lubricants is the third largest finished lubricants supplier in the United States, with five proprietary blending plants, an R&D center in Ponca City, Okla., base oil and solvent production, and two major lubricant brands: Phillips 66 and Kendall. Two other lube brands, Conoco and 76 Lubricants, are being phased out. It has sales in 50 countries, and markets in Europe through Jet and Coop retail outlets. The company continued its integration of Spectrum Corp., an independent blender, packager and marketer of specialty lubricants acquired in 2014.

Indian Oil developed 18 new lubricant formulations during 2014 and 2015. Of these, seven products have been commercialized, accounting for 1,000 metric tons of sales. The companys finished lube sales registered a growth of 0.6 percent over the previous year, and institutional lube sales registered a growth of 1.9 percent. IOC is the largest lubricant supplier in India and has worked to develop sales in other countries. Its subsidiary in Sri Lanka is one of the leading suppliers in that nation, and the company has begun using that operation to export to markets in Southeast Asia.

Hindustan Petroleum, benefitting from the healthy rate of growth in its home market, sold 478,000 metric tons of lubes and greases during the year, up from 442,700 tons. Besides sales volume, the public sector utility is trying to shift toward products with higher profit margins. Value-added lubes recorded 16.4 percent growth on a volume of 253,600 tons. Hindustan is also the nations largest base oil producer and the only refiner in India with capacity to make Group III base stocks.

Petrobras is Brazils heavyweight, with a 25 percent share of the countrys 1.2 million metric ton lubricants market. It operates and supplies Petrobras Distribuidora, Brazils leading service station network of 8,176 outlets; sells lubes under the Lubrax brand; and owns three base oil refineries. Beyond its borders, it has blending plants in Chile and Colombia, plus sales in Argentina, Paraguay and Uruguay. It faces economic and political headwinds that pushed Brazils total lube demand down 7 percent in 2015.

Additive Companies

Ranking the top 10 additive companies is less exact once weve acknowledged the Big Four: Afton Chemical, Chevron Oronite, Infineum International and Lubrizol Corp. Geeta Agashe, president of Geeta Agashe & Associates, considers BASF SE and Chemtura Corp. as the next two largest additive suppliers. She went on to name these other significant global players: Croda International, DOG Chemie, the Elco Corp., Evonik Oil Additives, King Industries, Lanxesss Rhein Chemie business unit, Tianhe Chemicals and Vanderbilt Chemicals LLC.

This list corresponds closely to that of Grand View Research in its Lubricant Additives Market Analysis, which cites the key manufacturers in the additives field as Afton, BASF, Chemtura, Chevron Oronite, Croda, Evonik, Infineum, Lubrizol, Shamrock and Tianhe.

Kline & Co. pegs lubricant additives demand at 4.2 million metric tons/year, and estimates that Afton Chemicals, Infineum, Lubrizol and Oronite account for over three-quarters of the sales volume. One industry observer claims the share is closer to 85 percent.

Two of these companies – Lubrizol and Oronite – are closely held subsidiaries of larger corporations (Berkshire Hathaway and Chevron, respectively), while Afton is the principal business line of its parent, Newmarket Corp. And Infineum is a joint venture between ExxonMobil Chemical and Shell Chemical. As a result, it is difficult to pinpoint market share and trends for the Big Four, and they declined to provide volume data. In most of the other listed companies, lubricant additives is a small portion of a larger business segment, and volume data is not typically made available.

Grand View Research expects the global lubricant additives market to reach U.S. $18.85 billion by 2024. It noted that additive prices declined sharply in 2015 because of price fluctuations for key raw materials, including calcium carbonate, zinc and crude oil.

According to Grand View, the global market for lubricant additives was 4.28 million tons in 2015, and is forecast to reach 5.36 million tons by 2024, growing at a compound annual growth rate of 2.5 percent. It says viscosity index improvers were the leading product segment with about 23 percent of the market in 2015. In the future, friction modifiers are expected to register the highest volume growth rate of 3.5 percent a year due to the increased demand for fuel efficient lubricants.

Asia Pacific emerged as the leading regional market with demand share exceeding 30 percent in 2015. High demand for passenger cars in China, South America and Southeast Asia along with a robust lubricant aftermarket sale is expected to complement the regional demand.

Lisa Tocci and Tim Sullivan contributed to this article.