Kline report: U.S. industrial lubricants market to remain stable

Overall U.S. consumption of industrial oils and fluids is estimated at 1,200-1,300 million gallons, with process oil as the leading product category, accounting for slightly less than half of the market, according to a new report from U.S.-based market research and management consulting firm Kline.

General industrial oils, which include products such as hydraulic fluids, turbine and circulating oils, compressor and refrigeration oils and gear oils, rank second in consumption, representing almost one-fourth of the total consumption.

Industrial engine oil, which is the third-leading category, is closely followed by metalworking fluid.

Rubber process oil is the leading process oil type, and hydraulic fluid is the leading general industrial oil in the United States. Marine engine oil leads amongst industrial engine oils, and removal fluid is the leading metalworking fluid.

The major types of metalworking fluids covered in “Opportunities in Lubricants: North American Market Analysis (Industrial Oils and Fluids)” are removal fluids, forming fluids, protecting fluids and treating fluids.

The rubber and plastics industry, with roughly one-fifth of total demand, is the leading end‑use industry for industrial oils and fluids in the United States. The electrical equipment and energy transmission industry is second, followed closely by the chemicals and allied products industry. These industries heavily consume process oils, which explains their highest share in the industrial lubricants market.

General industrial oils, as the name suggests, have a more generic application and are used across the industrial sector in a variety of manufacturing applications. Industrial engine oils are mainly used in agriculture/fishing and off-highway transportation industries, such as marine, aviation and railroad industries.

Metalworking fluids are considered as specialty oils because their application is limited to metalworking industries, such as automotive, fabricated metal products, primary metals and machinery manufacturing.

The industrial lubricants market is highly fragmented and competitive. The market is quite diverse as lubricant consumption, maintenance, and purchasing practices vary with application and end-use industry. While these variations add to the complexity of this segment, they also provide opportunities to the suppliers for product and services differentiation. Consequently, the market is served by a variety of suppliers that include major oil companies, large specialty manufacturers, small specialty firms and distributors.

According to Sushmita Dutta, project manager in Kline’s Energy Practice, “It has been observed that major oil companies focus more on large-volume and high-margin products whereas specialty products manufacturers have created a niche for themselves. ExxonMobil, Shell, Chevron, and Philips 66 are relatively strong in general industrial oils and industrial engine oils. Whereas metalworking fluids are the core business area for specialty suppliers, such as Houghton, Fuchs, and Henkel Technologies.”

Smaller manufacturers concentrate on building professional relationship with customers based on providing technical services and customised offerings, whereas distributors are more concerned with timely delivery, availability of products, price gain, and retaining customers. Ergon, Calumet, and HollyFrontier are mainly active in the process oil market. Overall, Ergon is the leading supplier to the industrial lubricants market in terms of volumes sold in 2016.

According to the Manufacturers Alliance for Productivity and Innovation, the U.S. manufacturing sector is forecast to witness slow growth that will average around 1.6% per annum from 2017 to 2020. The United States is a developed and highly industrialised country with limited opportunities for the expansion of the industrial sector. Moreover, cost optimisation and improving energy efficiency remain the focus in the industrial sector. This is leading to better fluid management and housekeeping practices coupled with slowly growing penetration of synthetic fluids, which offset volume growth due to greater efficiencies.

Dutta said the country’s demand for industrial lubricants “will remain fairly stable.” In terms of absolute volume, rubber and plastic products manufacturing and electrical equipment and energy transmission industries will show the largest gains, mainly due to the increased consumption of process oils. The tire manufacturing industry, which is the largest consumer of rubber process oils, will be propelled by the consistent growth in the automotive industry, which will drive demand for both replacement and original equipment tires. Growth of electrical equipment and energy transmission will primarily be driven by domestic capacity additions/revamping as well as growing demand for natural gas, whereas the marine and printing industries are likely to witness a decline in lubricant demand.

Slowdown in international trade, increase in the use of high-quality lubricants due to changes in engine design, and stringent environmental regulations will have a dampening effect on the growth of marine lubricants. Electronic media will continue to hurt the printing industry. Process oil and general industrial oil will continue to lead the market, together accounting for approximately 70% of the total volume of industrial oils and fluids in 2021.

Dutta will be hosting a webinar on “Opportunities in Lubricants: North American Market Analysis – Industrial Oils and Fluids” on July 27, 2017 at 9:30 AM EDT. You may click here to register.