Kline reports bright signs for 2010 after 2009 gloom; Russia lubricants volumes are down; Shell boosts its Chinese blending capacity; ILSAC GF-5 get final approval; the EPA wavers over waivers and Nigeria bans lubricant bulk sales.
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Global lubricant demand projection Source: Kline It was farewell to the old and welcome to a brighter outlook according to global analysts, Kline. Their Global Lubricants Industry review for 2009 reflected a gloomy year with a massive drop of as much as 40% at the beginning of the year.
A flat second quarter was followed by signs of recovery in Q3, particularly in India and China. The improvement continued into Q4, with Kline stating that prospects for global consumption will continue to climb in the New Year rising to a recovery around 2007 levels by 2012. The most significant change is in lubricants consumption patterns, with a move away from North America to focus on Asia and Europe, with the consequent supply challenges for lubricants, base stock and additives.
Kline's key tip for 2010 success in the "new lubricants market" is to get to grips with post-recession customer needs including: maintenance activity and brand loyalty; understanding the changing automotive sector, particularly relating to compact cars and the increasing Asian car park; keeping a close watch on re-refining trends; and understanding the potential effects of ethanol, biodiesel and flex fuel vehicles on the lubricants market.
The Russian market was one of many to suffer badly in 2009. As Lube Report's Boris Kamchev noted, Russian lubricants volumes dropped by around 24%, a similar fall to those in 2008. The top three producers continue to be LukOil (with a 45% market share, followed by Rosneft - the state-owned organisation, with 19%, and Gazprom at 13.5%.
China's recovery was reflected in Shell's announcement of the opening of it's sixth lubricants blending plant in the country. The Zhuhai operation, in Guangdong Province, will produce lubricants for dedicated Chinese markets in consumer, transport, industrial and marine sectors. The 'state-of-the-art' plant will have an initial production capacity of 50 million gallons per year, with phased development leading to a total 100 million gallons annually. Shell also announced the development of a new technical facility at the complex which will include laboratory, research, training and marketing operations on-site.
The creation of ILSAC GF-5 appears to be complete with the new passenger car engine oil specification receiving approval from API balloted members. The Ballot was passed with 10 in favour (with two comments) and two abstentions and was based on the November draft of the specification with one paragraph amendment. Product licencing for the new standard is expected to begin in October 2010. The API now has the major task of drawing up its companion SN category (replacing the SM version) to sit alongside GF-5. This will include SAE 10W-40, not covered by the new ILSAC specification.
However, the US Environmental Protection Agency's ruling on the 15% ethanol waiver still appears to be some months away, following a letter from the EPA to Growth Energy. The organisation is petitioning for an increase in the ethanol content threshold in gasoline from 10% to 15%. The delay, already hinted at in 2009, is due to the EPA's desire for more vehicle testing data, a decision apparently welcomed by the automotive industry.
Meanwhile ATIEL and ATC are appealing to downstream lubricants suppliers to ensure they are fully aware of the new descriptor database for the use of lubricants and additives under the REACH initiative. Both European trade bodies are urging any organisations that have not already contacted them to inform them if they are planning to use their own systems.
The next stage in the process is for ATIEL and ATC to develop generic exposure scenarios for lubricant categories and to run environmental risk assessment studies, with publication slated for early in 2010.
Elsewhere, Nigeria continued its drive against contaminated lubricants by banning the bulk sale of lubricants to retailers throughout the country from January 1, 2010. Instead of supply from bulk tanks, only branded and packages lubricants can now be supplied for retail.
ExxonMobil announced a 15% increase in production of its high viscosity SpectraSyn™ 40 cSt and SpectraSyn™ 100 cSt polyalphaolefins (PAO) by 15 percent to meet demand for its high performance. And Germany's biodiesel quality organisation AGQM added a further 20 products to its 'no-harm additive list'.