Who Are the Additive Winners (and Losers)?


In 2010, the worlds lubricant manufacturers plunked down an estimated $10.3 billion to buy 3.7 million metric tons of chemical additives. Thats well below their 2008 consumption of more than 4.0 million tons – but recovery may be just over the horizon, suggests a recent study from Kline & Company.

Purchases of these specialty chemicals will grow an average 3.2 percent per year to reach 4.3 million tons by 2015 (barring a serious economic disruption that could derail their progress), forecasts the Parsippany, N.J.-based market research firm. Thats better than the 2.5 percent growth in demand projected for the lubricants market as a whole. Whats more, some additives types (such as antioxidants) may see nearly double their peers rate of growth.

Three functional classes – dispersants, viscosity index improvers and detergents – comprised 68 percent of the global lubricant additives market in 2010, pointed out Kline project manager Milind Phadke. All three are backbone chemistries for automotive engine oils, which are dosed pretty vigorously with additives. Heavy-duty and passenger car engine oils account for 24 and 20 percent of the worlds 36.4 million ton lubricants market, but they use 34 and 27 percent of its additives volume, respectively.

Metalworking fluids are another product that consumes an outsize share of additives. At just 6 percent of the worlds lubricants, metalworking fluids represented a relatively small market of just 2.2 million tons in 2010. But they accounted for a much higher share of additive sales – 16 percent – because they are highly additized, Phadke said during a webinar this summer on Klines 400-page study, Global Lubricant Additives Market, 2010-2015. He continued, General industrial oils, by contrast, tend to be lightly additized.

The Big Picture

Klines volume estimates included both active additive components and their diluent oils, Phadke pointed out, but not aftermarket or over-the-counter sales to consumers. Looking at the broad market, he said additives demand naturally rises and falls with overall lubricants demand, and general lack of economic growth represses recovery in most regions.

Global lubricant additives consumption reached 3,670 kilotons in 2010, Phadke said, with heavy-duty motor oil, passenger car motor oil and metalworking fluids – the three largest additive applications – together accounting for about 70 percent of this volume. All of these products are highly additized.

Industrial engine oils (for marine, railroad, natural gas and stationary diesel engines) have the next-largest appetite for additives, and account for another 11 percent of global additive consumption, he said. Other automotive products such as automatic transmission fluids, tractor hydraulic fluids and two-stroke engine oils make up 7 percent of global additives volume.

The remaining 5 percent of the worlds additives go into general industrial oils: hydraulic and turbine oils, greases and minor process oil applications.

Value of the global additives market was $10.3 billion overall, but 2010 saw prices fluctuate widely, said Phadke. Kline obtained its estimate of the markets value by averaging the quarterly sales prices, but he noted that prices can vary significantly depending on whether an additive is sold directly to the blender by the component manufacturer, or if it is incorporated into a value-added package thats ready for blending into a finished lubricant. Volume also makes a difference in the cost equation, he observed, with larger blenders able to negotiate lower prices.

Heavy-duty, Heavy User

Heavy-duty motor oils use one-third of all additives sold, and need a complicated cocktail of chemicals: dispersants for cleanliness, viscosity index improvers to minimize the viscosity changes caused by temperature changes, and detergents for neutralizing acids. These three components will make up about 85 percent of the total HDMO additive package, said Phadke. Antiwear is another key function, and primarily depends on zinc dialkyldithiophosphate, ZDDP.

Changes to this mix will depend on global growth in the HDMO market and how formulations evolve over time in response to clean-air mandates. Formulators are being called on to reduce tailpipe emissions, as well as safeguard on-board devices such as exhaust gas recirculation systems (EGR) and diesel particulate filters (DPF).

EGR cuts nitrous oxide emissions, but it also creates more soot and acids in the oil, leading to greater need for dispersants and more TBN reserve, Phadke observed. DPFs capture particulate that otherwise would be spewed into the air, but they can become clogged with traditional oil additives based on metal ash, so thats driving a desire for low-ash additives. Over time, Kline foresees lower treat rates for detergents in these oils, in order to reduce their impact on DPFs.

Fuel quality is another issue for HDMO, with biodiesel being linked to oil oxidation and sludging, and ultra-low-sulfur diesel needing greater amounts of low-ash additives. Biodiesel and ULSD also require greater volumes of antioxidants, especially as detergent levels are trimmed. HDMO and the additives needed will grow overall, said Phadke, and antioxidants will outpace the other components.

Working on PCMOs

In todays passenger car motor oils, the viscosity index improver accounts for about 40 percent of the add pack, the dispersant about 32 percent, and detergents 12 percent by volume, said Phadke.

Friction modifiers are the big story in PCMO, and their use has consistently increased from the ILSAC GF-3 specification to GF-4 and now to GF-5 engine oils, he added. Sales were spurred by friction modifiers positive impact on fuel economy, but some in the industry believe that treat rates have maxed out.

Some feel the cost is limiting further friction modifier use, and that the fuel economy benefits are pretty well done, Phadke commented; others point to trouble between friction modifiers and turbochargers, which auto manufacturers plan to install on more vehicles in the future. Despite these concerns, Kline predicts friction modifiers will likely see better-than-average demand growth, better than 7 percent a year in PCMOs and 4 percent a year overall to 2015.

Meanwhile, the workhorse antiwear additive ZDDP is under pressure due to its ill effects on catalytic converters on the PCMO side, and the need to reduce sulfated ash, phosphorus and sulfur on the HDMO side. Both products will use less ZDDP, although the need for wear protection wont ease.

In terms of overall growth, Kline expects to see low growth rates for ZDDP and detergents. Dispersant and antioxidant treat rates will increase, especially with the need for longer drains and more sludge handling, Phadke said. Already, dispersants are the largest single additive type, accounting for nearly 900 kilotons or 25 percent of the total market in 2010.

ATF and Gear Oils

In other automotive applications, such as automatic transmission fluids, gear oils and tractor hydraulic fluids, the main drivers are a desire for lower start-up viscosity, fuel economy and extended life, Phadke said. He forecast more adoption of shear-stable and star-shaped viscosity index improvers, rather than old-line copolymers.

The ATF segment will continue to see a fracturing of specifications from automakers, even though installers in the service-fill market would prefer to see universal oils that can be used in a wide swath of vehicles. This creates opportunities for additive suppliers, Phadke pointed out.

For gear oils, the antioxidants used tend to be sulfurized olefins, a lower-priced product with some extreme-pressure properties, versus the phenolic type antioxidants used in PCMO. But as OEMs trend towards longer drain intervals for gear oils, more and better antioxidants will be needed to help the fluids last longer.

Metalworking Drivers

Phadke then turned to the extremely fragmented niche of metalworking fluids, where change is driven largely by health, safety and environmental concerns. Its hard to come up with an average formulation for these, since so many of the products are customized, he said, but corrosion inhibitors are an essential component due to the presence of water in metalworking operations. Typical corrosion inhibitors are low-molecular-weight petroleum sulfonates, oxygenated paraffin waxes and oxygenated petrolatums. Emulsifiers are another key additive type, and petroleum sulfonates and fatty acid ethoxylates are among the principal chemistries.

The big news for metalworking is the phase-out of certain chemicals due to health and safety concerns, such as formaldehyde-releasing compounds and some chlorinated paraffins. Reformulation is slow, however, because alternative chemistries bring their own problems. For example, noted Phadke, formulators who move away from chlorinated paraffins may hear complaints about odors from sulfurized additives.

Also, Group I base oil is being replaced by Group II and III, which are actually unsatisfactory in many metalworking fluids. These more highly refined oils have lower solubility and lower sulfur content, both of which can be problematic. Meanwhile, more naphthenic base oils are entering the market.

Phadke said there is no clear overarching trend driving metalworking fluids today, so its hard to see how each functional class will be affected. In general, Kline expects the volume growth of additives simply to track the overall growth in fluid demand.

Summing up the overall findings of the study, Phadke said better-than-average growth rates will be seen for sales of antioxidants, friction modifiers, dispersants, pour point depressants and V.I. improvers. Demand for extreme pressure agents, antiwear and detergent additives will grow, too, but these will find it much slower going than the rest of the additives market.