Weak growth in demand for lubricant additives
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Author:pmo55f6d8
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Published time: 2019-04-12
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According to IHS Markit's latest report, the global market for lubricant additives (LOA) reached 4.2 million tons in 2018, with a market value of about $15 billion. IHS Markit said that as consumer demand has been slowing down, the market is expected to grow at an average annual rate of only 1.3% between 2018 and 2023, with total demand reaching 4.4 million tons in 2023. In the next five years, China, India and other parts of Asia will maintain the highest growth rate of lubricant additives, with an average growth rate of 3.3%-3.7% in 2018-2023. According to the statistics of 2018, North America has the largest market for lubricant additives, accounting for 29% of the world total, followed by China, accounting for 16.6%, and Western Europe, accounting for 12%.
According to statistics, nearly 70% of the consumption of lubricant additives is used in the automobile market. The largest single end products are lubricants for automotive engine crankcases, passenger cars and heavy diesel engines. Other automotive applications include hydraulic and gear oils. Lubricant additives are also used in metal processing fluids and industrial lubricants.
Most lubricant additives for automotive use are supplied to manufacturers of formulated lubricant products. According to IHS Markit, this situation has made the position of the main supplier of lubricant additives very stable. At present, the LOA market is still dominated by four manufacturers, namely Afton, Chevron Oronite, Infineum and Lubrizol, which are joint ventures between ExxonMobil and Shell. According to IHS Markit statistics, these four companies account for 85% to 90% of the global LOA market.
According to the report, the growth opportunities of LOA market are mainly driven by mandatory regulations (such as those related to improving fuel efficiency or emission control) to update additive specifications and formulations. Environmental problems in emerging economies such as China are also accelerating the upgrading of automotive lubricants, which provides more opportunities for market growth. The mandatory regulations of the US and EU governments on fuel emissions, especially greenhouse gas emissions and fuel economy, also have a significant impact on the formulation of lubricants. The new formulation of vehicle oil meets these regulations. Among them, the specifications require the use of low viscosity lubricants, higher levels of friction improvers, and increased oxidation resistance and sediment formation protection functions.
Specific trends in certain industries will also have an impact on the LOA business in North America and Western Europe. LOA producers will continue to improve profitability by reducing costs and eliminating production capacity in areas with no significant growth prospects. These companies will also continue to increase profit margins by increasing market share in more profitable areas such as industrial lubricants and automotive lubricants.
Regulators in North America and Western Europe will continue to put pressure on the automotive industry to control emissions, especially diesel engines, and improve fuel economy for most types of vehicles. This puts forward higher requirements for lubricants, including reducing the levels of metals, phosphorus and sulfur.
According to IHS Markit, EU regulations on chemical registration, assessment, authorization and restriction (REACH) have increased costs for manufacturers, distributors and users. Of course, these costs will also be passed on to end-users, resulting in higher prices of additives. For some smaller suppliers, the cost of compliance with REACH regulations may be so high that production is no longer economically viable, resulting in a reduction in the number of chemicals available in lubricant formulations.
IHS Markit says China is implementing stricter emission standards to address the growing pollution problem in its major cities. Due to the enforcement of mandatory vehicle fuel standards, China's fuel quality has improved significantly. The development trend of lubricating oil additives in China will be to shift to low sulfur and phosphorus additives to avoid negative impact on emission control catalysts.
