Not the short-lived jolts that every company learns to expect, such as logistical hiccups or a temporary outage. Global shifts are occurring – Europes REACH regulations, crude prices, the worlds thirst for biofuels, demand for chemical commodities in China – which can spell lingering difficulties for the lubricants industry, said Joachim Korff of Lanxesss Rhein Chemie business unit.

Change already is buffeting the metals, ores and chemical intermediates used as raw materials in the additives industry, Korff said. Add the continuing consolidation of the chemical industry, and lube blenders must take a more strategic approach to long-term availability, he said.

Korff, who is executive vice president of the Mannheim, Germany-based additive manufacturer, spoke in late October to Europes independent lubricant manufacturers at the UEIL meeting in Warsaw, Poland. He pinpointed a number of raw materials with consequences for lubricants, beginning with natural seed oils and esters.

These biobased resources saw huge demand from the biofuels industry in the past few years, he said, bringing new capacities and markets for plant-based methyl esters which were strongly driven by fuels pricing. Some materials hit peaks never seen before; rapeseed oil, to name just one, more than doubled in price from 2005, with the steepest hikes coming in 2008.

But cost is not the only issue, Korff remarked. Despite the higher capacities in seed oil production and esterification, the supply situation of suitable raw materials for the production of additives has not been improved, but on the contrary, became more and more problematic, he said. As fuels became the main application, quality changed and the flexibility of major producers of esters or biofuels was reduced.

How did this upstream change affect lubricants? Korff cited the example of sulfurized extreme-pressure agents used in industrial lubricants and metalworking fluids, many of which are based on vegetable or animal oils and corresponding esters. These lube additives depend on the vegetable oil or fatty acid ester to meet several critical specifications, including iodine number, fatty acid distribution, cloud point, color and more. Lube applications also demand tight control of acidity and viscosity.

However, as upstream suppliers shifted to favor the high-volume fuels industry, lube and additive companies found themselves less able to dictate quality. Since the vegetable oils or animal oils now are showing variances in many specs, it is obvious that the performance of the sulfurized additives will be different as well, cautioned Korff. Additive companies need to have secure supplies of the correct raw materials, with consistent quality, he said, and that will require global sourcing, long-term partnerships with suppliers, and even backward integration.

AVAILABILITY ISSUES

Does the supply picture look brighter going into the new year? Thats hard to gauge, Joe Clayton, president of chemical distributor Sea-Land Chemical in Westlake, Ohio, told LubesnGreases. On the positive side, costs have come down for tallow and lard oil, which are used to make stearics for many lubricants and metalworking fluids, he said. But business is slowing down and capacity closing, so availability wont automatically begin to improve, Clayton said. Yes, as demand drops youd expect prices to fall, but it also means that producers are not making as much, so were still seeing some availability issues.

The price of tallow is down, and so stearic costs are down, but if stearic manufacturers snug supply, and only run a few days a week instead of five or six days, that will keep supply tight, he added.

Clayton suggested three things that every lube, grease and metalworking fluid manufacturer should do: One, make sure you have an alternative chemistry for similar operations, perhaps one based on a synthetic and one based on vegetable oil. Two, keep in close contact with your suppliers for information and availability of raw materials. Companies like us check in constantly with our customer base. We have a strong rapport and so we have the product on the floor for them.

Three, keep informed, make sure youre looking at whats happening. We routinely send information to customers, like news articles and reports. Markets can change quickly, and if youre not paying attention you can get caught quickly.

Above all, recognize that the market is going to change, and when it does, you need to be able to sit in front of the customer with the right toolbox, Clayton went on. In a changing market, you dont always know whats out there, but you can know what your possible strategy needs to be, and to know that there are options on the table.

THREE TO WATCH

The supply challenges for lubes are not limited to natural fats and oils, however. Korff gave additional examples of upstream issues, and said they are especially thorny when small, specialized volumes are needed:

Oxidized waxes. These are used along with sulfonates to make corrosion inhibitor additives. But not every wax works in harmony with every sulfonate, and the burden is on the additive supplier to ensure the performance is balanced. Rhein Chemie has seen issues where an additive formulation delivers good results, but only if a specific oxidized wax is used – the results do not transfer when substituting another oxidized wax. The challenge is to secure the performance of a formulation even if this specific wax is not available any more, or if the supplier is changing raw material sources or its production processes, Korff said. So several formulations have to be developed fulfilling the same performance levels and specs.

U.S. metalworking fluid formulators have raised the same concerns about oxidized waxes, echoed Clayton. Not many wax suppliers are available, and you need to have the correct wax. This is harder now that there have been so many refining process changes, he noted. He also advised keeping a close eye on supply of chlorinated paraffins, which may change a little because of paraffin availability.

Phosphorus-sulfur (P4S10) compounds. The building block for the anti-wear agent ZDDP, P4S10 affects various lubricants including hydraulic fluids, Korff explained. But P4S10 is supplied by several commodity chemical manufacturers, and it is not only used for lube additives; it also goes into insecticides, ore flotation agents and other chemicals. So to control ZDDP performance, suppliers need to look at the underlying P4S10, and select one that is suitable for lube additive packages. Minor impurities or byproducts especially can influence filtration properties and copper corrosion tests, Korff noted.

Olefins. Some extreme-pressure additives are based on sulfurized olefins such as C4 (butene) and C8 (octene). These additives can be differentiated by the chain length of the olefin used, and also by their total sulfur content and the proportion of active-to-inactive sulfur. However, the specialty olefins market has seen great restructuring in the past few years. At the end of 2005, BP Chemicals closed its world-scale linear alphaolefins plant in Pasadena, Texas, cutting over a billion pounds of LAO supply. That cut and others came just as olefins demand was growing in automotive and other applications, and the result was sharp price increase and a critical supply situation.

These changes have had a major impact on our process and new product development, Korff said. In one instance, Rhein Chemie was forced to delay marketing a promising new sulfurized-olefin EP additive. The additive had exceptional viscosity and copper corrosion performance, but the olefins supply outlook clouded its roll-out. The economics of this EP additive project had to be reevaluated and marketing had to be postponed and stopped so far, Korff reported.

Clayton shares Korffs concern regarding olefins. With current market conditions, things are changing very quickly, and weve seen some pricing issues recede, he commented last month. But there are still some availability issues such as for polyalphaolefin and for C8 for sulfurizing. There is still a lack of production capacity for C8, even in the face of very steady demand.

Finally, 2008 also brought more consolidation in the chemicals industry: Dow Chemical and Rohm and Haas planned to merge; Ashland bought Hercules Inc.; and BASF and Ciba announced their union. Korff, whose own company was formed when Lanxess was spun off from Bayer in 2005, expects consolidation and restructuring in the chemical industry will continue, as companies try to capture both market share and operating efficiencies. And that too will alter the raw material supply chain.

Long-term product availability of high-quality raw materials fulfilling special requirements for additive production will remain a major challenge for any producer of high performance additives, Korff emphasized to the Warsaw meeting. The only way forward will be with close cooperation with suppliers of chemical intermediates, back integration, and strategic partnerships with selected suppliers, he advised.