Synthetic Lubricants Market

The global synthetic lubricants market size valued at USD 4.40 billion in 2018 and is expected to grow at a compound annual growth rate (CAGR) of 5.1% from 2019 to 2025. Growing demand from automotive manufacturers is expected to have a positive impact on the market growth over the forecast period. These group of chemicals has numerous applications in the automotive sector in the form of diesel engine oils, gearbox lubes, and transmission oils in passenger and commercial vehicles and motorcycles. Superior performance offered by synthetic lubricants over their mineral counterparts, in terms of high temperature operation range, low friction, and higher load carrying capacity, will boost their demand further.

Rising demand from the automobile and industrial segments in Asia Pacific due to new machine installations and increased production of branded cars is also expected to augment the demand. In addition, technological advancements, such as the NSF food lubrication standard set by major equipment builders for the use of synthetic lubricants in the food industry, is expected to boost synthetic lubricants market growth. Europe led the global market in the past due to high product from Germany due to the presence of automotive production base in Germany. The regional market is projected to maintain its dominance during the forecast years due to rising demand for environmentally sustainable, premium products with high-performance.

Reduction of viscosity in synthetic lubricants reduces engine friction, which, in turn, enhances fuel efficiency. Thus, increasing demand for vehicles with improved fuel economy is predicted to drive the market further. Manufacturers are developing new products with technologies that make them further suitable in different equipment with extreme temperatures and pressures. However, preference for cheaper substitute mineral oils due to high cost of these synthetic oils may hamper market growth. Rising need for reducing maintenance costs in the manufacturing sector is expected to trim down the scope of synthetic lubricants. Incompatibility of Polyalkylene Glycol (PAG)-based oils with Polyalphaolefins (PAOs) and conventional mineral oils is also expected to create obstacles for market growth

Furthermore, performance of PAG-based oils is significantly affected by water reactivity and this is expected to have a negative impact on its demand. Fluctuating prices of crude oil coupled with diminishing oil reserves have forced manufacturers to focus on developing new techniques as well as new sources for raw material production. Advancement in hydraulic fracturing technology and development of new techniques, such as Enhanced Oil Recovery (EOR), has increased oil & gas output. This trend is particularly observed for reserves present in U.S. and Canada. As a result, shale gas and tight oil has emerged as an alternative for providing naphtha, which can be processed to form ethylene oxides.

Globally increasing expenditure on automobiles has been a key pillar to the market growth. Automotive manufacturers are becoming more consumer centric in their business approach thereby manufacturing high-performance vehicles that incurs minimum maintenance cost over longer duration of productivity.

Esters are anticipated to be the fastest-growing product segment over the forecast period. Growing demand for ester-based synthetic lubes in reciprocating compressors is one of the major factors driving the segment. Ester-based lubricants are more stable at high temperatures as compared to PAO and are increasingly used in jet engines. They are also used in gearboxes, reciprocating compressors, and hydraulic power packs.

Polyalkylene glycol (PAG) is expected to be the second fastest-growing segment owing to its rising application in the production of food-grade and metal working fluids. Biodegradability of PAG encourages its usage in environmentally sensitive applications. Rising focus on reducing the carbon footprint is likely to boost the demand for PAG-based lubricants.

Europe led the global market and will continue the trend during the forecast years. Major factors driving the Europe market include increased focus on fuel economy and CO2 reduction, manufacturing sector recovery, regional base oil supply, and product quality improvement. Various environmental, health, and safety regulations laid down by the European Union may pose a challenge to the market growth. Increasing sales of premium vehicles in Asia Pacific is expected to drive the market in this region. The market in Asia Pacific is highly capital intensive and is majorly dependent on publicity and product innovations. It is dominated by a few oil companies producing synthetic lubes with extensive distribution networks. Refinery businesses in Asia Pacific, specifically in India, China, and Singapore, have capitalized on low crude oil prices, which have impacted in increased production in petrochemicals in the region.