Lubricating Oil Additives
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Published: December 2012
Lubricating oil additives (LOAs) are used to enhance the performance of lubricants and functional fluids. Each additive is selected for its ability to perform one or more specific functions in combination with other additives. Selected additives are formulated into packages for use with a specific lubricant base stock and for a specified end-use application. The largest end use is in automotive engine crankcase lubricants. Other automotive applications include hydraulic fluids and gear oils. In addition, many industrial lubricants and metalworking oils also contain LOAs. The major functional additive types are dispersants, detergents, oxidation inhibitors, antiwear agents, extreme-pressure additives and viscosity index improvers.
Government regulations have had a major impact on the LOA business in the past and are likely to remain important in the future, as upgrading lubricants is part of the effort to improve fuel economy and to meet more stringent emission-control requirements.
The following pie chart shows world consumption of lubricating oil additives:
Price increases in recent years have largely reflected higher raw material prices, tied to tight supplies of some of these materials and the general impact of higher crude oil prices. The revenues of the industry increased slightly during 2008-2011 despite the economic difficulties.
The LOA business is dominated by four multinational companies, some of which are or were linked to the major oil companies. They are Chevron Oronite Company LLC (owned by Chevron Corp.), Afton Chemical Corporation, The Lubrizol Corporation and Infineum (a joint venture of ExxonMobil and Shell). They account for over 85–90% of the business on a worldwide basis.
The split between demand for lubricants (the end-use market for LOAs) in the automotive and industrial sectors varies widely across the world. Lube oil for automotive applications depends on automotive production as well as on automotive possession. In some Asian countries, especially in India, Indonesia and Thailand, lube oil for motorcycles plays an important role because of high motorcycle production and possession in these countries. For industrial uses, economic development and industrialization usually result in lube oil consumption growth. The past decade's improvements in automotive sector consumption efficiency have resulted in a sharp drop in the automotive sector's share in Europe.
Given the outlook for economic and fuel consumption growth in the individual regions and anticipated trends in lubricant consumption efficiencies, global demand for lubricants is expected to grow at average annual rates of approximately 2–3% through 2016. This growth is due partly to demand increases in developing countries and partly to demand recovery in industrialized countries. However, the recent slowdown of the world economy may lower the growth rate through 2016.
The best growth opportunities for LOAs are in the rapidly growing Asia Pacific market—especially China, India and the ASEAN countries. Based on improvements in political and economic stability, growth should also be better in Central and Eastern Europe, including the countries of the former USSR. Brazil is leading the growth in South America. Companies that are well established in these locations are in the strongest position to take advantage of these opportunities. Growth rates for the LOA business in the developed world, where the market is highly mature, will remain minimal. The most important considerations in the most economically developed regions are the changing technology in the end-use industries (e.g., automotive engine design), government regulations (e.g., lower emissions and lower fuel consumption) and the need to provide the attributes the end-use industries or lubricant manufacturers wish to promote in their marketing strategies (e.g., longer drain intervals and lower maintenance costs).