Global demand for general industrial lubricants and grease is expected to remain to stand through 2021, hovering around 6.4 million tons, said Kline & Co. in a webinar.
Over the past five years, general industrial oil and grease demand has declined slightly but has remained in the 6.4 million to 6.5 million ton range, according to Kunal Mahajan, project manager for the Parsippany, New Jersey-based consultancy.
He noted that demand for some oils, such as turbine and circulating oils, compressor oil and refrigeration oil, has increased, while demand for other oils – like hydraulic fluid and industrial grease – has declined.
At present, hydraulic fluids lead the segment, accounting for more than 50 percent of industrial oil and grease demand in 2016. Hydraulic fluids are used across various industries in equipment such as forklifts, cherry pickers, metal rolling and hydraulic pumps and motors.
Gear oils and turbine and circulating oils each make up roughly 15 percent of the segment – for a total of 30 percent – followed closely by grease, at around 10 percent. Compressor oil and refrigeration oil share the remaining demand.
Asia-Pacific, with its many developing markets, dominates, holding approximately 45 percent of global demand. The region is followed by Europe and North America, with nearly 15 percent each, with South America and the rest of the world at roughly 7.5 percent of demand.
Kline, however, anticipates demand in Asia-Pacific to decline because of shutdowns in excess capacity in the primary metals and mining industries in China, and industries in Japan shifting operations overseas.
On a global scale, all general industrial oils are expected to enjoy slight growth, all under a CAGR of 1 percent. Grease, however, will see a CAGR decrease of around 1 percent through 2021. Mahajan cites three major factors contributing to this decline.
The less demand for primary metals and mining industries, shifting towards high-performance greases, increasing use of over-greasing prevention methods has mentioned as the major factors contributing to this decline.
Some modern equipment, like new hydraulic equipment, have lower fluid volumes with respect to pump flow rate and operate under high temperatures and pressure. “Under such extreme conditions, mineral-oil based products tend to break down, resulting in the precipitation of contaminants. Therefore, end users are moving towards synthetics in modern equipment,” asserted Mahajan.
Synthetics will grow most in turbine and circulate oil, at a CAGR of about 3.5 percent through 2021, followed by refrigeration oil at a CAGR just under 3 percent and gear oil hovering around a CAGR of 2 percent.
It is an observation that the higher use of synthetics, using recycled lubricants and fluid management services may slow down demand; however, the swift growth of synthetics over mineral oils in all product categories offers a new opportunity to the market.