SCUP Report

Table of Contents

Abstract

Synthetic lubricants (synlubes) are defined as lubricant products that consist of fluids made by chemical conversion of low-molecular-weight components plus additives. Products derived by hydrogenation/cracking after distillation of crude oil are not within the scope of this report. Mineral oil–derived products are marketed as "synthetic" by the industry.

Synthetic base stocks (fluids) are produced by processes that are controlled in order to restrict the finished base fluid to one or a defined range of compounds. This permits the selection of those chemical compounds that have the best properties and provide superior lubricant performance compared with conventional mineral oil–based lubricants under specific operating conditions. These superior properties may include good thermal and oxidative stability, low-temperature fluidity, low volatility, high viscosity indexes and fire resistance. There are about ten significant synlube product types or classes, most of which contain many individual products or individual molecular structures. Each of these product classes has unique properties that make it particularly well-suited for certain specific applications, but not for others. Thus, each class rarely competes with more than one or two other classes of synlubes in any specific end use.

Since synlubes are generally far more expensive than conventional mineral oils, their use has traditionally been restricted to those applications that demand the very high performance characteristics that only the synlubes can provide. Increasingly, however, industrial customers in some segments are taking a broader and longer view of their total costs and are opting to use synlubes to reduce maintenance, minimize disposal problems, or satisfy health, safety or environmental regulations. Since the 1990s, a major driving force for the strong growth of synlubes in the automotive sector has been the promotional campaigns of lubricant manufacturers for their synthetic automotive crankcase and gear oils and the new requirements of automotive manufacturers, especially in Western Europe. The ongoing demand for higher fuel economy has also pushed the use of high-quality motor and gear oils. Another important development was the growing use of synlubes as refrigerator oils to provide compatibility with the new refrigerants that have replaced chlorofluorocarbons (CFCs). The latter development has continued into the new century, and greatly increased the use of synlubes in this application.

The market for synthetic lubricants is dominated by three product groups: polyalphaolefins, esters and polyalkylene glycols. Their combined market share in 2008 was 90%. The major market drivers during 2005–2008 were the growing demand for industrial lubricants in China and India as well as the growing automotive fleets in China, Russia and Brazil.

The following pie chart shows world consumption of synthetic lubricants:

The synlube business includes large volumes of polyalkylene glycols and low-viscosity polyalphaolefins that are sold largely as commodities, but also many small-volume, high-priced specialty chemical products. Nearly all synlubes enjoy growth rates that are faster than mineral oils, and many are growing faster than other specialty chemical product types. Although many segments of this business appear attractive (good growth and limited competition), entry into this market would not be easy, except through acquisition, which often means acquiring other related businesses linked to synlubes only by the family of products the acquired company produces.

While the total share of synthetic lubricants in the global lubricant business is only around 2.6%, their importance is growing as more and more applications demand a performance that is borderline or beyond the capabilities of conventional lubricants. This is reflected by the fact that synlubes represent about 10% of the total value of the global lube oil market. The world market is projected to grow at an average annual rate of 2.0% per year on a volume basis to 2013. Growth in synlubes is expected to continue at a low rate in North America and Europe. In contrast, no growth or even decline is expected in Japan and Western Europe. High growth rates are expected in China, Brazil and India.