U.S. demand for synthetic lubricants and functional fluids will expand more than three percent per year to $4.8 billion in 2013, with growth rising at an even faster pace in volume terms to reach 520 million gallons. These and other trends are presented in Synthetic Lubricants and Functional Fluids, a new study from Cleveland-based industry research firm The Freedonia Group Inc.
According to the study, engine oils and hydraulic and transmission fluids will experience the fastest gains as synthetics finally begin to penetrate the conservative medium- and heavy-duty truck market, and as increasing new vehicle lubricant performance requirements and growing consumer acceptance further expand synthetics' share of the light vehicle market. "There are a number of issues that have held synthetics back, though the primary one has been the prevailing conservative approach of ‘If it isn't broke, don't fix it,'" says Ned Zimmerman, industry analyst for Freedonia. While engine oils and hydraulic and transmission fluids will achieve relatively strong growth going forward, other types of synthetic lubricants and fluids are expected to realize a slow decline in demand through 2013, largely as a result of falling average fluid prices.
The largest market for synthetic lubricants and functional fluids is light vehicles. This reflects not only consumer uptake of engine oils and transmission fluids, but also the universally synthetic nature of antifreeze, brake and de-icing (windshield wiper) fluids.
The fastest growing market for synthetic fluids will be the medium- and heavy-duty truck market. Increasingly stringent engine specifications, as well as a move by many engine manufacturers to specify low viscosity engine oils for their 2010 emissions-compliant engines, will finally lead many fleet operators to evaluate and use synthetic engine oils and hydraulic and transmission fluids. Synthetics will benefit from their better performance under load in low viscosity formulations, as well as from the reduced maintenance and downtime costs that result from synthetics' extended drain intervals. The latter will be increasingly important to fleet operators looking to cut costs.
From a product standpoint, the greatest declines will be in heat transfer and metalworking fluids. In addition to declining vehicle antifreeze demand, the greater use of fill-for-life coolant systems in industrial equipment and the increased recycling of deicing fluids at airports will contribute to falling heat transfer fluid demand. Synthetic metalworking fluid demand will suffer from increasing substitution of bio-based fluids for synthetics. "This substitution is not universal, but occurs most often where lubricant is released into the environment, or where there is to be likely human contact with the lubricant on a regular basis," Zimmerman says. "In these cases the bio-based lubricant is typically perceived as being more environmentally friendly, and less likely to be toxic to humans.
"Due to differences in how frequently the different types of lubricant need to be changed, a small impact on volume demand may exist."
Reflecting their heavy use in engine oils and hydraulic and transmission fluids, Group III base oils and polyalphaolefins will be the fastest-growing synthetic chemicals, with esters also achieving positive value growth through 2013. Due to recent growth and technological development in the synthetic lubricant market, this Freedonia study chose to focus on that area. A more generalized report is also produced, but due to the scope, it is not possible to focus on synthetics in this kind of detail, according to Zimmerman.
"While it is true that synthetic lubricants and functional fluids are not universally superior to mineral oil-based lubricants and fluids for all applications and under all use scenarios, for many applications synthetics have a demonstrated advantage," he says. "This is particularly true in the large volume engine oil market where the synthetic lubricants can facilitate extended drain intervals, particularly relative to lubricants formulated with Group I and Group II base stocks."