Around 15 years ago, the big four additive package suppliers made decisions that were undoubtedly good for their companies, but also created niches for others to fill. The broad-brush description is that each of Afton Chemical, Chevron Oronite, Infineum and Lubrizol wanted to increase their average profit margin across their whole portfolios.

One of the consequences was less focus on low- and mid-tier products in the automotive market and selective withdrawal from some product markets. Where once all four competed in almost every mainstream lubricants product area, perhaps only two were devoting money to research and development while the others were either using their product lines to generate cash or were no longer selling lubricants for certain applications.

This offered a great opportunity for existing niche companies in the West. For these smaller companies, volumes that were a fraction of a percent of the big fours sales represented large increases. That demand for finished products wasnt necessarily in the leading rich and developing nations, but the blending plants of the independent lube marketers often were.

Meanwhile, the so-called tiger economies of the Far East were growing significantly, with Western lubricant marketers chasing factory fill volumes for new manufacturing joint ventures and service fill opportunities for the high-end vehicles that were produced or imported. The big four additive suppliers had large markets to chase and gradually followed the international lubricant marketers as they grew eastward. Margin per ton of lubricant sold to the original equipment manufacturers, or of additive sold to the lube marketers, was good.

However, the workers who were making the high-end vehicles and Western-designed industrial equipment werent always driving new Western vehicles. The attitude that foreign is best, which fuelled a lot of growth for Western companies, began to wane, and new chemicals companies emerged to play in the mainstream Chinese markets dominated by state-owned industries. Opportunities arose for new lubricant marketers and additive package suppliers that were willing to focus on the cost-conscious consumer and business manager. Initially, manufacturers of components entered the fray, but eventually package suppliers emerged.

Chinese Package Suppliers

Two of those additive package suppliers were Tianhe Chemicals Group Ltd. and Jinzhou Kangtai Lubricants Additives Company Ltd., which have their headquarters about five kilometers apart.

Tianhe is the name most recognized in the West as a supplier of additive packages, partly because its name appears regularly on the financial pages rather than the technical ones. The company first came to the attention of many when Morgan Stanley invested $300 million in 2012, and again this year when Hong Kongs Securities and Futures Commission fined UBS, Morgan Stanley and Merrill Lynch for inadequate due diligence in Tianhes 2014 initial public offering.

However, on the technical side, Tianhe moved quickly, early. It secured the services of senior product developers with experience working for the big four to develop products and testing programs to give them a portfolio of additive packages alongside their individual ingredients.

Tianhe claims that its highest tier packages for passenger car motor oils are licensable to API SL or API SN service categories in ExxonMobil API Group II base oils. G. S. Ravi, the energetic former CEO of Tianhes lube additives business, pushed a frantic development agenda, courting oil majors with a strong commitment to becoming a genuine global number five additive company. A lot of that ambition has dissipated with the accusations of financial irregularities and the departure of most of the team that led Tianhe in 2012, but the remaining company has a component and package portfolio produced in modern plants and is the fifth-largest additive package supplier in China, according to most measures.

Jinzhou Kangtai was formed in 1998 and has grown more gradually than Tianhe. With three additive manufacturing locations, their largest volumes are in components, such as sulfonate detergents, zinc dialkyl dithiophosphates and ashless dispersants. Like Tianhe, most of the companys manufacturing equipment is new, and its in-house manufacturing capability for the building blocks of lubricant additives gives them a stable technical base from which to formulate packages.

Jinzhou Kangtai has developed additive packages for low- and mid-tier passenger car motor oils and for several industrial applications. According to its president, Yu Peigen, component sales dominate, with exports to several major Eastern markets. Most additive packages are destined for Middle Eastern blenders.

Western Independents

Dublin, California-based International Petroleum and Additives Co. was formed in 1999 by current President and CEO Brian Cereghino, who brought 12 years experience with Chevron Oronite. This included component development, formulation of fuels and lubricants additive packages and sourcing third-party toll blending.

Ipac began supplying additive packages early in its history for gear oils and tractor hydraulic fluids. This portfolio has expanded to include passenger car and heavy-duty diesel engine oil packages, industrial fluids and automatic and manual transmission packages. We develop, manufacture, test and deliver quality additive packages that meet or exceed industry standards, Ipacs website states.

In 2010, Ipac opened its research and technology center in Midlothian, Virginia. The facility allowed the company to better focus on component and additive package development. It is also their base for customer and marketing technical services, which Ipac uses to differentiate itself from the competition. Len Badal, vice president of business operations, joined the company in early 2019 after more than 20 years working in lubricants for large multinational oil companies.

Gradual expansion for Ipac in the United States has been followed by growth in sales activity worldwide, with some toll manufacturing now in Ghent, Belgium. Most components are either manufactured in-house or toll manufactured by companies that are mostly in the U.S.

Ipacs core market remains the U.S., where its customers mainly sell finished products. However, an increasing volume of additives as well as Ipac customers finished products are finding their way to Latin America, the Middle East and Asia. Ipac also has a subsidiary company registered in Rotterdam, the Netherlands.

Ipac was asked to contribute to this article, but responses were not finalized by deadline.

Formed at the turn of the century, Wickford, United Kingdom-based SBZ Corp. started out as a distributor of base oils, fuels and lubricant additives. Founder and CEO Laurence Holder brought with him extensive experience with global oil majors, including fuels and lubes, and could see that large oil companies globalization, consolidation and portfolio simplification would result in a thriving market for independent oil sellers. Holder saw an opportunity for SBZ to service those independents.

We could see a number of niche positions in the market. The gaps we saw were often people gaps, not technical gaps, Holder told LubesnGreases. Staff at other companies with significant customer experience were moving on but were sometimes not replaced, so Holder ensured that SBZ was able to fill those relationship gaps, as well as the technical ones.

After about a decade of obtaining high quality and consistent componentry as a distributor, SBZ took its first step into formulating additive packages in 2013 with a fuels package. Shortly afterward, the company produced its first lubricant packages for hydraulic and automotive crankcase fluids. Theres a huge market for low-tier products, said Andy Ogley, chief chemist with SBZ. Many of our customers have huge export markets for obsolete specifications. These vehicles are out of warranty, so the vehicle owners wont go to franchised workshops.

We are here to support the independent lubricant manufacturers, said Holder. They wont be supporting the local franchise for a major automotive OEM.

Specifications, whether current or obsolete, are often irrelevant to the sale of a product; fitness for purpose is key. Fuel quality in many countries drives the formulation of the lubricant, Reggie Disley, sales manager, explained.

Fitness for purpose is often demonstrated by field trials in working vehicles. A product sold into a market that still uses obsolete API specifications would be formulated using modern additives, such as high-activity dispersants, which werent available when that API specification was current.

While additives have become more readily available, Holder pointed out that one major component of additive packages is becoming much harder to source reliably: API Group I base oil. SBZs plant is within a few miles of BPs former Coryton base oil plant, but that closed in 2012. Now the only Group I base oil source in the UK is ExxonMobils Fawley refinery, but they dont supply truck loads, said Holder.

SBZs customer base is independent lubricant marketers in Europe and North America. However, their products rarely stay in those markets. Most are blended into finished formulations and exported to the Middle East, Africa and Latin America. Like Ipac, SBZ has toll blending arrangements on another continent-in this case, the U.S.

All four independents mentioned in this article see growth in their core markets. Tianhe, having flirted with rapid expansion and competing directly with the big four, seems to have reined in its ambitions. The company did not reply to requests for comment by deadline. They may have to fight off Jinzhou Kangtai for fifth place in the Chinese market, but both companies have also gained export business in the Middle and Far East. With modern and purpose-built manufacturing assets, they both have foundations for growth.

The core customer for all four companies remains the independent oil marketer, with which they seek to gain market share through close attention to the needs of their customers. Our objective is not to be number five [globally], said Holder. We will continue to support the independent oil marketers, particularly in Europe and North America.