The overall demand growth rate has slowed down, with synthetic lubricants standing out as the exception”

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The overall demand growth rate has slowed down, with synthetic lubricants standing out as the exception. According to Sinopec News, the market penetration rate of synthetic lubricants was 13% in 2015, and it is expected to reach 15% by 2020. Over the next 5 years, global demand for synthetic lubricants is expected to grow at an average annual rate of 2.9%, which is nearly five times the average annual growth rate for industrial lubricants. According to Klein Consulting in the United States, which spoke at the North American Industrial Lubricants Conference recently, the growth rate of global lubricant demand will slow down over the next 5 years, but there will still be good market opportunities in certain industrial sectors. Overall demand growth is slowing down. Kline Consulting states that global demand for lubricants was 39.4 million tons in 2015, with an average annual growth rate of less than 1% until 2020. In 2015, demand for lubricants in the Asia-Pacific region accounted for 44% of the global total, demand in North America accounted for 23%, demand in Europe accounted for 17%, Africa and the Middle East together accounted for 8%, and South America accounted for 8%. The sector with the highest demand for lubricants is the automotive industry. In 2015, engine oils accounted for 44% of global lubricant consumption, of which oils for heavy-duty vehicles made up 23%, while oils for passenger cars and motorcycles accounted for 21%. George, industrial manager for energy practices at Kline Consulting, said, “In terms of the applications for lubricants, the greatest demand is for engine oil, used in heavy vehicles, passenger cars, and motorcycles, as engine oil needs to be replaced regularly.” Apart from engine oil, the type with the highest consumer demand is processed oil, accounting for 15% of total demand; other automotive oils account for 9%, hydraulic oil accounts for 8%, industrial engine oil accounts for 8%, general industrial oils account for 7%, metal processing fluids account for 6%, and lubricants account for 3%. Excluding processed oils, the global demand for industrial lubricants in 2015 was estimated at 12.2 million tons, with an average annual growth rate of 0.6% expected over the next 5 years. The demand for the 3 most commonly used industrial lubricants in 2015 was as follows: approximately 3.2 million tons for hydraulic oil, about 3 million tons for industrial engine oil, and around 2 million tons for metal processing fluids. The United States, China, Japan, Russia, and India are the top 5 countries in terms of global consumption of industrial lubricants, accounting for approximately 51% of total global consumption in 2015. The United States consumed around 2.5 million tons, China slightly more than 1.5 million tons, Japan and Russia each consumed around 1 million tons, while India consumed around 500,000 tons. The market penetration of synthetic lubricants is on the rise. According to Kline Consulting, although the overall demand in the lubricant market is slowing down, there are significant opportunities in the synthetic lubricant sector, especially in the industrial lubricants market – driven by rapid growth in demand on one hand, and strong profitability on the other. George said that demand is shifting toward high-quality products. Research by Klein Consulting shows that, compared to conventional lubricants, synthetic and semi-synthetic lubricants are gradually gaining market share, especially in the industrial lubricants sector, primarily because they offer better quality and a longer service life. The market penetration rate of synthetic lubricants was 13% in 2015, and it is expected to reach 15% by 2020. Over the next 5 years, global demand for synthetic lubricants is expected to grow at an annual rate of 2.9%, which is nearly five times the average annual growth rate for industrial lubricants. George said, “Overall, global demand for lubricants is expected to remain stable in the coming years, but there are more opportunities for high-quality lubricants, synthetic lubricants, and semi-synthetic lubricants.” Europe and North America have the highest market penetration rates for synthetic and semi-synthetic lubricants, while the markets in Asia-Pacific, Africa, the Middle East, and South America are lagging behind. The market penetration rate of synthetic lubricants in the United States was 20% in 2015, and it is expected to reach 22% by 2020. George said, “The demand for synthetic lubricants in the United States is growing rapidly, driven primarily by the technical requirements of original equipment manufacturers.” In addition, the power industry’s demand for synthetic lubricants is also growing rapidly, accounting for 14% of total industrial lubricant demand in the United States in 2015. George said, “New alternatives for power generation have driven rapid growth in the demand for synthetic gear oils and synthetic lubricants, especially with the rise of onshore and offshore wind power industries.” Globally, the market penetration rate for compressor oils and refrigeration oils is set to reach 60% by 2020. George said, “The original equipment manufacturers of compressor oil have linked extended equipment warranties and oil change intervals to the use of their own brand of synthetic lubricants, which benefits certain suppliers and has led to a strong increase in demand for synthetic lubricants in the compressor industry.” Furthermore, the demand for refrigeration oil will grow rapidly, especially in the field of mobile air conditioning. This is because automobile production and sales in Asia, Africa, and South America are growing rapidly, and an increasing number of cars are equipped with air conditioning, which drives rapid growth in the demand for synthetic refrigeration oils.