Strong demand for synthetic lubricants leads to increased investment in LAO production

Industrial Lubrication and Tribology

ISSN: 0036-8792

Article publication date: 1 February 2002



(2002), "Strong demand for synthetic lubricants leads to increased investment in LAO production", Industrial Lubrication and Tribology, Vol. 54 No. 1.



Emerald Group Publishing Limited

Copyright © 2002, MCB UP Limited

Strong demand for synthetic lubricants leads to increased investment in LAO production

Keyword: Lubricants

Around the globe, petrochemical companies are increasing their investment in the production of Linear-Alpha Olefins (LAOs) in a bid to keep pace with the growing demands of end-user industries. The fact that six facilities are currently either planned or under construction, including a new 20,000 tonnes/yr. plant in the Far East recently announced by Idemitsu, and three in the US and two in the Middle East is testimony to this expansion. Europe's largest existing facility is BP's Feluy plant in Belgium.

A new study from international market analysts Frost & Sullivan reveals that the growth in the synthetic lubricants industry in Europe is driving some of this increased demand for LAOs.

Whilst all the base oil types used in the formulation of synthetic lubricants will experience growth in the forecast period (2001-2007) it is the poly-alpha olefins (PAOs) that will exhibit the fastest growth with an estimated CAGR of 9.5%. And, PAOs are liquid oligomers of LAOs. The growth in the PAO market is primarily being driven by the demands from the 4-stroke crankcase oil market. This demand is expected to remain strong until a genuine alternative to PAO is commercially viable. The latest poly-internal olefins (PIOs) which are cheaper to manufacture are still in the developmental phase and so as yet present no threat to the PAO dominance.

Brian Balmer, Frost & Sullivan Industry Analyst adds: "LAOs, the sole raw material for PAO production have applications across a wide range of markets. Fifty percent of global demand is for C4-C8 monomers whereas LAOs in the range C6-C20 are preferred for synthetic PAO lubricants. So you can see that availability of the most suitable LAOs is a key issue in the manufacture of PAO synthetic lubricants."

The current European market for PAOs used in synthetic lubricants is 180,000 tonnes and valued at $255 million, the report forecasts that revenues will rise to over $480 million by 2007. If this growth rate is sustained then PAOs will overtake Group III oils as the largest volume-selling synthetic base oil in Europe by the end of the forecast period.

The report examines the market for synthetic lubricants from two angles: by base oil chemistry and by end use. The chemistries covered are; group III oils, poly-alpha olefins (PAO), polyisobutene (PIB), organic esters, phosphate esters and polyalkylene glycols (PAG). The end use markets covered by the report include 4-stroke crankcase oils, 2 stroke engine oils, gear oils and ATFs, compressor and pump oils, hydraulic fluids and metalworking fluids.

The European Synthetic Lubricants Market (report code 3873-39) is available to purchase from: Frost & Sullivan, 4100 Chancellor Court, Oxford Business Park, Oxford, OX4 2GX, UK. Contact: Bill Stringer +44 1865 398651;