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Lubricating Industrialization for Economic Progress and Development
Lubricants are vital elements in the industrial operations. It is used to lessen the friction & abrasion and eliminate residual deposits in the mechanical components thereby extending machine runtimes.In the era of sustainability, energy savings and emission control; lubricants play an important role in resource management and environmental sustainability. Lesser mechanical friction means reduced power consumption and fewer emissions. Consequently, lubricants support sustainability targets in ecological, economical and social spaces.
Every year more than 35 million tons of lubricants are consumed across various industries. Base oils and chemical additives are the key components of lubricants. Mineral lubricants have long been the first choice in the market owing to their cost competitiveness and availability compared to its synthetic counterparts. However, the demand trends have gradually started shifting towards more performance and sustainable synthetic/semi-synthetic lubricants. Furthermore, synthetic lubricants have advantage of longevity due to its low volatility and improved thermal stability compared to mineral lubricants. Growing emphasis on utilizing environmentally sustainable solutions in the transportation sector to improve fuel economy and reduce CO2 emissions is expected to boost the demand for synthetic lubricants over the coming years.
In 2018, Asia Pacific accounted for more than 45% of the total lubricants market. Lubricants market has seen a dramatic rebound post 2008-2009 economic recessions. Asia Pacific is one of the key driving factors behind this recovery as there is a huge ongoing evolution in industrialization and motorization. Although, this region still holds less per capita lubricants consumption as compared to developed in North America and Europe. Post 2008, North America and Europe region has shifted towards the usage of high quality lubricates with improved efficiencies and long drain intervals. Furthermore, environmental regulations in Europe and North America regarding disposal and usage of lubricants is expected to drive growth for lubricants derived from eco-friendly bio-based materials or re-refined base oils. Middle East & Africa is expected to exhibit the fastest growth owing to changing landscape in infrastructure investment and automotive industry. Strong investment in mining, energy and transportation sector has been boon to the rise in demand for lubricants in the region.
Market to Thrive Due to Encouraging Manufacturing Sector in Emerging Economies
New government policies and initiatives are likely to encourage manufacturing sector, especially in Indian Subcontinent and Southeast Asia. As newer production technologies and infrastructure develops in the region, lubricants market in the regions is expected to gear up to meet the customized needs. Per capita consumption of lubricants is also low (3.7 Kgs as compared to world average of 5 Kgs) creating an immense market potential for years to come. There is substantial growth in demand for metalworking fluids, hydraulic fluids, industrial grease, and marine oils due to advancement in industrial sector.
As the world moves towards electrification of roads, hybrid cars and electric vehicles keep on redefining the automotive industry. Demands for lubricants will also shapeup with the ad cements in the automotive industry. Currently, engine oil comprises the largest share in the segment. Automotive industry commands more than half of the consumption of lubricants across the globe. A new set of lubricants needs to be developed to meet the performance of electrical and gear components in next generation cars. Lot of research and development is going on in the field of biolubricants to be integrated with EV and HEV fluids for a more eco-friendly and suitable solution.
Battery Electric Vehicles and Environmental Regulations to Pose Serious Threat
Growth in battery technology, environmental regulations and industry consolidation are considered among the major disruptive factors affecting the growth of lubricants. Lubricants demand will undergo drastic change in consumption trends, especially with the introduction of battery operated electric vehicles. BEVs are expected to capture 5%-10% of the total vehicle fleet by 2030 and expected to pose a larger challenge to the lubricants market as they do not use engine oils and consumes very minimal amount of greases. Tougher environmental policies will also give rise to industrial revolution focusing on improved recycling technologies and circular economies, thus affecting the overall lubricants demand in industrial sectors.
Companies Focus on 3P’s of Sustainability: Profit, Planet and People
Lubricants market is highly vibrant and intense, with plenty of global, regional and independent lubricant manufacturers. Companies such as Shell, ExxonMobil, Total, BP, Chevron, and Sinopec have integrated business operations. Companies are focusing on strategies such as mergers, diversification, business restructuring to gain sustainability and resilience in the market.
In 2019, Shell announced carbon neutral wind turbine oil, Shell Omala S5 Wind 320. Shell has upped its efforts to create environmentally sustainable portfolio. This new oil comes with 10-year warranty aiding reducing costly breakdowns and wear protection. In 2019, Total launched a range of recycled hydraulic fluids for industrial applications. These new ranges of lubricants are made from regenerating oil reducing the environmental footprint of production thus contributing to the goals of circular economy.