Global demand for lubricant additives will grow at a faster pace than finished lubricants over the next few years, as performance upgrades force blenders to inject heftier doses of additives into their products. Not every type of additive component will see healthy demand, however, and some – such as detergents – will trail the pack as others barrel ahead, Kline & Co. predicts.
In 2014, additives by volume amounted to 11 percent of the worlds 39.4 million metric ton finished lubricant market, said an official with the Parsippany, N.J.-based market research and consulting firm. That makes additives worldwide a 4.2 million t/y market, he said, a volume that includes both the active components and the diluent oil that makes them easier to blend into lubricants. The findings were presented in a webinar previewing Klines upcoming report, Global Lubricant Additives: Market Analysis and Opportunities.
The new report categorizes additives by function class. In volume terms, the top three types are dispersants, viscosity index improvers and detergents, and Kline found these made up a combined 70 percent of the additives market. The next three classes, antiwear agents, antioxidants and corrosion inhibitors, are around 17 percent of the market, and emulsifiers, friction modifiers, extreme pressure additives and other components slice up the rest of the pie.
Kline also segments the additive market by lubricant category. In 2014, two-thirds of the global additives volume went into automotive applications: Additives for heavy-duty motor oils and passenger car motor oils together claimed 60 percent of all additives demand, and a 6 percent sliver went into other automotive products such as transmission fluids and gear oils.
The remaining third of the additives market splits fairly evenly between metalworking fluids and industrial engine oils (which include marine and railroad engine oils), and small but notable segments such as general industrial oils and greases.
Growth for both additives and finished lubricants is expected to be modest through 2019, Klines Energy Practice Director Milind Phadke noted in a Nov. 17 presentation. Kline predicts a compound average growth rate of 1.2 percent a year for finished lubricants during that period, and 1.6 percent a year for additives.
From Klines historical perspective, we see that lubricant additives closely tracked finished lubricants demand, as would be expected, Phadke said. Both went down in the aftermath of the recession in 2010, and have since been recovering.
Additives for metalworking fluids showed the starkest evidence of this, as volumes shrank almost 14 percent from 2008 to 2010 due to contractions in major industries such as auto manufacturing, shipbuilding and steel working; by 2012, they had withered another 4 percent. Once the economic recovery began to perk up, though, the metalworking additives category surged back and gained nearly 7 percent each year from 2012 to 2014.
Total additive volume demand worldwide was just above pre-recession levels in 2014, nudging past the 4 million ton mark and back on track for normal growth rates in 2015. As well, additives showed overall growth of 1.8 percent per year after the recovery, which was higher than finished lube demand. This is a relatively recent phenomenon that Kline attributes to the more widespread adoption of higher-quality lubricants.
The entire global market is shifting from API Group I base oils – in some places slowly and in others rapidly – to Group II, Group III and synthetic base stocks, which perform better in many finished lubricants, Phadke said. But formulators are also looking to satisfy more stringent demands with higher additive treat rates.
Higher quality lubricants require higher additive treat rates, he pointed out. Lubricants are generally improving, due to drivers such as a shift toward lighter viscosity engine oils in some parts of the world, more focus on fuel economy in various lubricant segments, pushes for improved engine cleanliness or the usage of biodiesel and ethanol fuels. In almost all cases this requires more additives.
Components used in formulations vary widely throughout the primary lubricants segments. For automotive oils, the big additive categories in 2014 were dispersants, detergents and V.I. improvers. Also significant were antiwear agents and antioxidants.
On the passenger car motor oil side, the automotive industrys heightened demands for fuel economy, compatibility with emission control technologies and extended drain intervals will see lighter-vis products such as SAE 5W multigrades climb from 30 percent of the worlds top 15 markets in 2009 to a solid 40 percent in 2024. This means oil formulators will begin to rely even more heavily on friction modifiers and antioxidants. V.I. improvers will continue to hold the biggest share of PCMO additive demand, at about one-third of the total in 2019.
The same three components – dispersants, detergents and V.I. improvers – took up the largest shares of the heavy-duty motor oil additives market in 2014, too. However, HDMO also has shifted focus in recent years, and products must now be compatible with ultra-low-sulfur fuels and emissions control technologies such as exhaust gas recirculation and selective catalytic reduction. As a result, Kline predicts that consumption of antioxidants and corrosion inhibitors will increase in the HDMO category; theyll see 2.5 percent yearly growth from 2014 to 2019.
Phadke noted that the rising popularity of heavy-duty SAE 15W oils is propelling additive demand in regions such as South America, Asia-Pacific, Africa and the Middle East, while monograde engine oils continue to fall from favor. In North America and Europe, the shift is toward even lighter grades, such as SAE 10W-30 and 5W-30.
Formulation changes in the industrial segment – which includes metalworking fluids, industrial engine and gear oils, marine lubricants, railway lubes and more – are driven by increasing severity of operations and demands for longer service intervals. There has also been an uptick in the use of biolubricants such as vegetable oils, and in the adoption of API Group II and III base stocks. Oil marketers will look to additive companies for help surmounting the challenges resulting from these developments, Phadke said.
In some cases, the industrial segment is also turning to additives to surmount shortages in bright stock.
About one-sixth of the worlds lubricant additives go into metalworking fluids, and this segment is acutely sensitive to policies requiring blenders to eliminate harmful chemicals and to health, safety and environment regulations. The metalworking industry is also seeing shifts in metallurgies, materials and machining techniques and is adopting environmentally benign feedstocks such as oleochemicals and vegetable oils. Innovative or reshuffled additive packages will play a role in all of these scenarios, Kline added.
Overall, Kline expects almost every category of additive to grow at rates of 1 to 3 percent per year through 2019. Antioxidants show the strongest outlook at almost 3 percent, followed closely by V.I. improvers. Dispersants, friction modifiers and pour-point dispersants are all forecast to move slightly faster than the total additives market.
Lagging the field somewhat, but still ahead of the growth curve expected for finished lubricants, will be antiwear additives and emulsifiers. Extreme pressure additives and corrosion inhibitors are viewed as keeping pace with finished lubes.
Kline forecasts that detergents will move at the most sluggish rate – advancing less than 1 percent a year – in each of the next four years.
Phadke emphasized that consumption of all types of additives is rising, but with the exception of dispersants and V.I. improvers, the growth rates dont represent significant volumes. At 11 percent of overall lubes tonnage, he noted, additives still make up a relatively small percentage of most finished lubricant blends.
Phadke concluded by pointing out that there are two types of players in the additives market: component suppliers, which produce individual types of additives such as antioxidants, rust inhibitors or defoamers; and additive package blenders that combine, test and market blends of components that are ready to be combined with base oils.
These add pack formulators must have a deep understanding of what the market needs are and what original equipment manufacturer needs are, he said. They must be on top of evolving engine technologies and emission control strategies being implemented, and have know-how of all the various additive components and chemistries available. Then they must be able to test formulations and get them to market.
This segment has a very high barrier to entry, he continued, and as a result we see primarily four companies throughout the world. They are Lubrizol, Infineum, Afton Chemical and Chevron Oronite.
This is changing, with some suppliers coming from China and [other parts of Asia], but its proving very difficult for them to break into this space, Phadke surmised.
This is the fourth edition of Klines report on the global additives market, which it updates every two years.