The European Automobile Manufacturers’ Association said the European Union’s new proposal for heavy-duty transport emissions reduction is not fit purpose. Original equipment manufacturers would struggle to comply with targets that are ambitious on paper to avoid heavy penalties, despite “unwavering commitment to decarbonisation and record investment levels in zero-emission vehicles.”

ACEA expressed its concerns after Members of the European Parliament voted on October 24 to adopt proposals to strengthen carbon dioxide reduction targets for medium and heavy-duty trucks and buses. These targets would be a reduction of 45% for 2030-2034, 70% for 2035-2039 and 90% as of 2040.

Heavy-duty vehicles account for more than 25% of the EU’s road transport greenhouse gas emissions. They also account for more than 6% of total EU emissions. ACEA thinks that proposal places the onus to decarbonise too far on its members’ shoulders. Customers are reluctant to buy zero-emissions vehicles because of a “pervasive lack of charging and refilling infrastructure.”

“Decarbonising heavy-duty transport is not a solo endeavour,” said Sigrid de Vries, ACEA director general, in a press release. “We operate within a highly interconnected transport ecosystem. To create an environment where vehicle manufacturers can thrive and meet targets, we need a collaborative effort from all stakeholders, including policymakers.”

de Vries argues that until uptake enablers are in place, such as purchase and tax schemes, compliance is largely dependant on factors outside of OEMs’ direct control. This makes the EU’s carbon targets unachievable.

“The transition towards zero-emission trucks and buses is not only key to meeting our climate targets, but also a crucial driver for cleaner air in our cities. We are providing clarity for one of the major manufacturing industries in Europe and a clear incentive to invest in electrification and hydrogen,” said Rapporteur Bas Eickhout. “We’re building on the Commission’s proposal, but with more ambition. We want to expand the scope of the rules to small and medium-sized lorries and vocational vehicles – sectors which are especially important for urban air quality – and we’re adapting several targets and benchmarks to catch up with reality, as the transition is moving faster than expected.”

Japanese car giant Toyota claims it has solved the technological problem in solid-state battery design that could double range and slash electric vehicle charging time to 10 minutes. It would also put an EV’s total cost of ownership on par with an internal combustion engine car.

EV enthusiasts have long-touted solid-state batteries as a key to unlocking mass EV adoption. Other automakers are working to produce safe and reliable solid-state batteries, including Toyota’s domestic rival Nissan and American manufacturer Ford.

Replacing the liquid electrolyte in a typical lithium-ion battery with a solid can increase power density and the battery’s functional life. The less complex design of a solid-state battery doesn’t require liquid cooling systems and reduces the likelihood of thermal runaway.

The company claims its new technology – an undisclosed gel, according to motoring website Top Gear – can offer a range of 1,200 kilometers. This is almost threee times that of the Tesla Model S, which is the current longest-range EV. Toyota also says charging times of only 10 minutes are achievable.

Toyota estimates that mass production could start by 2027 or 2028. This would accelerate EV uptake in markets where it has been stumbling in 2023, such as the United States.

“The era of the solid-state battery is right around the corner,” said Idemitsu’s CEO Shunichi Kito, announcing the deal with Toyota, adding that recent innovations will help the batteries now in the works overcome the edge lithium-ion batteries have had over EVs.

Producing solid-state batteries in large volumes is not without its challenges. They are costly and difficult to make, requiring high levels of precision to stack cathode and anode cells. Toyota can look forward to a “relatively tough path towards scaling up over the coming decade,” thinks Goldman Sachs. Problems include extreme sensitivity to moisture and oxygen and preventing formation of metal filaments that can cause short circuits.

Toyota has formed a partnership with Idemitsu, a Japanese oil major and lubricant producer, to work on the technology. Idemitsu has been researching basic technologies for all-solid-state batteries since 2001, while Toyota started little bit later, in 2006.

Solid-state battery is made up of a cathode, a thinner metal anode, and solid electrolyte between them. It is different from lithium-ion batteries that use liquid or semi-liquid electrolyte so they risk damage such as swelling or leakage.

At least some lubricant manufacturers in Mexico were said to be scrambling with disruptions in base oil deliveries after the nation’s president imposed new paperwork requirements for imports of petroleum products and chemicals.

President Andres Manuel Lopez Obrador decreed the new system Monday, the latest step in the government’s fight to curb the expanding illicit fuels market. The Ministry of Energy already issued licenses for the import of petroleum products and petrochemicals.

The decree by Lopez Obrador mandates that license holders also present the ministry’s Undersecretary of Hydrocarbons with a new document, an application demonstrating that the volume of material being transported is necessary for production of the manufactured product that is its stated purpose, and that the imported material will be used in a legal way.

Gasoline and diesel are exempt from the new requirement. The decree states that the new applications will be required beginning a month after the decree’s effective date of Oct. 24. As of Wednesday night, the application was not yet appear in the federal government’s website for permits, licenses and other forms.

A market source told Lube Report Wednesday of interruptions in base oil deliveries from the United States already occurring and of Mexican lubricant producers scrambling to obtain the applications.

The United States-based Independent Lubricant Manufacturers Association distributed a statement Wednesday expressing concern about the impact to member companies transporting base oils or lubricants from the U.S. to Mexico.

“The Association is contemplating contacting the U.S. Trade Representative’s office and the Mexican embassy in Washington, D.C., to voice our concerns,” the emailed statement said. It also asked members experiencing problems to report them to the association.

Mexico is one of numerous nations around the world that struggle with high levels of smuggling or illicit trade of fuels. Perpetrators often intentionally mislabel fuel as base oils or import base oil labeled as base oil but then use it as fuel, sometimes after blending with fuel. In doing so they avoid import duties or other taxes because base oils are taxed at lower rates than fuels.

Mexico’s government claims that 15% of the road fuels consumed last year were smuggled or illicitly traded.

Mexico has one base oil plant, at the Petroleos Mexicanos fuels refinery in Salamanca, but it has experienced frequent operational problems, forcing domestic lubricant producers to import most of their base oil.

JEDDAH, Saudi Arabia – Lubricant consumption in Africa is forecast to grow at a compound annual rate of 2.4% over the next five years, an official with base oil trader Penthol told an industry gathering here last week.

Cliff Classen, the company’s director of sales for Africa, told the ICIS Middle Eastern Base Oils and Lubricants Conference that the growth will be partly driven by the creation of a continent-wide free trade zone and increased use of personal power generators and that grease will be the fastest-growing product category.

Compared to other continents, Africa is one of the world’s smallest lubricant markets, but is expanding faster than some of the larger ones. The continent consumed 2.1 million metric tons of finished lubes in 2022 and is projected to consume 2.5 million tons in 2028, Classen said.

The forecast is underpinned by several key demographic trends. The region is young, with 75% of its population of 1.4 billion being under 35. By 2050 the population should swell to 2.5 billion, creating lubricant demand and providing workers for business growth. Africa’s population is also moving from rural areas to cities at an annual rate of 4.4% – faster than any other continent.

“Rapid urbanization and a burgeoning middle class increase the demand for housing, mobility, technology and on,” Classen said. “Demand for urban transport by 2050 is anticipated to be more than 6,500 billion passenger kilometers just in Sub-Saharan Africa. This is 2.5 times more than the demand expected in the European Union by that date.”

Economies on the continent have long been focused on supply of natural resources, in which it is rich, but numerous nations are now working to foster industry that processes and refines raw materials to make value-added products. This should raise demand for industrial lubricants while also reinforcing the growth of the middle class and its lubricant consumption.

Classen cited predictions that the African Continental Free Trade Area will add momentum to the region’s economic growth. Taking effect in 2021, the pact eliminates import and export duties between African countries to create a single market for goods and services. The World Bank estimates it will raise real incomes by $450 billion by 2035, lifting 100 million people out of poverty, he added.

Power generation is forecast to be the fastest-growing lubricant end-user industry, driven by continued expansion of mining and consumer demand from the growing population. Numerous countries are working to expand public electricity supply, but use of private generators will continue to increase because of inadequate grids.

Automotive engine oils currently account for 55% of Africa’s lubricant demand – an outsized portion due to the large number of passenger cars and relatively small size of the continent’s industrial base. That segment will keep growing, Classen said, as the region relies heavily on imports of used vehicles, which will continue to run mostly on internal combustion engines. But he added that grease demand is forecast to grow at a compound annual rate of 4.1%, making it the fastest growing product category.

Egypt is the continent’s biggest country market, accounting for 25% of lubricant demand, Classen said, followed by Nigeria at 21%, South Africa at 17%, Algeria at 9%, Morocco at 5%, Tunisia at 3% and Ghana at 2%.

Registrations of new battery electric vehicles and hybrids continued steady growth in September, according to data collected by the European Automobile Manufacturers’ Association.

While year-on-year sales of all cars grew, they have yet to return to pre-pandemic levels. Registrations in 2019 were 15.5 million units, crashing to 9.3 million in 2022. Automotive analysts from Jato speculate that annual sales are unlikely to return to the numbers seen before 2020.

BEVs captured 14.8% of the market, behind petrol and hybrid as the most-popular vehicle choice. This is the third time this year that BEVs have outsold diesels, ACEA said. Hybrids took 27.3% of the market while petrol cars saw market share decline to 34.1% from 35.3% this time last year.

Petrol car sales increased in absolute numbers by 5.5%, while market share shrank to 34.1% from 35.3%, year-on-year. Growth was kept bouffant in the bloc’s largest, namely Italy, Germany, Spain and France. Sales of diesel cars slumped by 12.5% in the same periods. The decline could have been greater were it not for Germans buying 4.6% more diesel cars. Diesels took a 12.7% market share, down from 15.9% in September 2022.

South Korea exported 21% less base oil in September, and the reported value of those shipments fell 34%, a government agency reported.

The country exported 328,741 tons of base oil in September, compared to 414,605 tons in the same month of 2022, according to information published by the Korea Customs Service.

The declared value of those oils was $379 million, a steep decline from $575.5 million a year earlier.

Both amounts were the highest since May when the volume was 333,536 tons and the value $405.5 million.

Imports of base oil into South Korea decreased 12% to 27,959 tons in the month as the value fell 25% to $32.4 million.

India’s Savita Oil Technologies Ltd. commissioned a new synthetic ester manufacturing plant, citing opportunities in new product categories and the burgeoning sustainability movement.

The plant, located at the petroleum specialty products maker’s facility in Mahad in the western Indian state of Maharashtra, is designed to manufacture synthetic esters for electrical transformer fluids, as well as immersion coolants and battery coolants for electric vehicles, Savita said in a stock exchange announcement.

The plant also has the capability to make synthetic esters for high-performance automotive and industrial lubricants, it added.

“The plant is designed for 5,000 metric tons,” per year production capacity, Savita Chairman and Managing Director Gautam Mehra told Lube Report in an interview, adding that the current operational capacity is 3,000 t/y. He declined to reveal the capital expenditure for the project.

Mumbai-based Savita – which supplies transformer oils, white oils, lubricants and other products – said that with the commissioning of the plant, it can manufacture and market all three classes of transformer fluids – those made from mineral oils, natural esters and synthetic esters.

“Our aim is basically to go for the premiumization of product range as well as look at the products that are sustainable,” Mehra said. Futuristic products like electric vehicle coolants and immersion data center cooling fluids are the focus, he said.

The company will make esters using fatty acids from several plant sources, including palm kernel, coconut and castor.

Savita said synthetic esters are the preferred base stock for EV coolants and immersion coolants for batteries and data centers due to their high thermal stability and good dielectric properties. Therefore, the company plans to launch a new range of EV coolants and immersion cooling fluids based on esters.

“In case of EV coolants, we already have one [original equipment manufacturer] who has approved our products, and for immersion cooling, we are undergoing trials with one company,” Mehra said, without disclosing their names.

Savita is also planning to launch a specialty range of esters to complement its existing offerings in several end-user markets – power, food and cosmetics, textiles and lubricants, according to its fiscal year 2022-2023 Annual Report.

In November 2022, Mehra said the company was developing new products to be launched in fiscal year 2023-2024 and investing Rs 50 crore (Rs 500 million or U.S. $6 million) for setting up manufacturing facilities for new products and capacity expansion.

S-Oil is contracting Gulf Lubricants Oil India Ltd. to blend and distribute its finished lubes in India – the first time S-Oil lubes have been manufactured outside its home country of South Korea.

Gulf announced the arrangement Oct. 19, although a spokesman acknowledged that it actually began in 2020. When Gulf began making the products then, it marked S-Oil’s entry into the Indian market.

The arrangement covers light-duty engine oils for vehicles running both on gasoline and diesel, marketed under S-Oil’s Seven brand. Gulf makes the fluids at its Chennai factory – one of three lube blending plants that it operates in India.

S-Oil’s sales channels in India include the local dealer network of Korean automaker Kia. The products that Gulf is making includes semi-synthetic and synthetic finished products. “The industry insight and expansive distribution network of Gulf Oil Lubricants position us favorably for extensive market penetration in India,” S H Son, team leader for S-Oil, said in a news release.

India is the world’s third-largest lube market. Gulf, part of the Hinduja conglomerate, is one of the market’s largest non-state-owned suppliers.

Seoul-based S-Oil is one of the largest refiners in South Korea and one of the world’s largest merchant suppliers of API Group II and III base oils, which are made at its refinery in Onsan, South Korea.

The sky isn’t about to fall in on the automotive lubricants sector. Far from it, thinks Adam Banks, Afton Chemical’s senior marketing manager of e-mobility. PCMO still has a way to go, and depending on the market and the mode of transport, the eventual rate of volumetric decline will be slower than some observers of the industry had feared.

Two-wheelers, especially in India and China, are going electric faster than four wheeler and on-road heavy duty faster than off-road, he says.

The U.S. Supreme Court last week decided against reviewing a lawsuit by the Minnesota Auto Dealers Association challenging the state’s adoption of California’s stricter low emission and zero emission vehicle standards, a rule scheduled to go into effect in Minnesota next year.

In June 2022, the Minnesota Auto Dealers Association announced it was filing the lawsuit in the Minnesota State Appeals Court challenging Gov. Tim Walz’s administration’s adoption of California Car Rules. Among other things, the association noted that under federal law any state wishing to adopt California’s emission rules and be governed by the California Air Resources Board must have had a designated geographic area that fails to meet federal air quality standards, known as “non-attainment” areas. Minnesota has not had a designated non-attainment area for greenhouse gases for over 20 years, the association asserted.

In March this year, the Upper Midwest Law Center, on behalf of the Minnesota Auto Dealers Association, then appealed to the Minnesota State Court, seeking to overrule the Walz Administration’s attempt to impose the California auto emissions rule on Minnesota. In January, the Minnesota Court of Appeals validated the state’s rule granting the California Air Resources Board oversight over Minnesota’s motor vehicle emissions standards.

“We are disappointed by the U.S. Supreme Court’s decision,” UMLC Senior Trial Counsel James Dickey said in a press release issued today. “Minnesota is not California – not a single area of the state fails to comply with federal air quality standards. As a result, we believe that under the federal Clean Air Act, Minnesota is not eligible to adopt California’s emissions rules. By not taking this case, the Court of Appeals’ flawed decision on this issue remains in place.”

According to Dickey, the Court of Appeals did rule that the Minnesota Pollution Control Agency cannot adopt any new California rules without going through new rulemaking. “The language of the California Car Rules made that uncertain, but because of our lawsuit and the Court of Appeals’ decision, any attempt to adopt California’s gas-vehicle ban or similar rules must go through rulemaking and a hearing before the people of Minnesota,” he noted.

In July 2021, Minnesota Gov. Walz signed off on the state’s adoption of California’s stricter low emission and zero emission vehicle standards, effective Jan. 1, 2024, for model year 2025 vehicles. That made it the 15th state to adopt what are referred to as clean car standards.

The policy will implement two clean cars standards to reduce vehicle emissions. The low-emission vehicle standard requires vehicle manufacturers to deliver passenger cars, trucks, and SUVs that produce lower greenhouse gas emissions and other pollutants for sale in Minnesota. The zero-emission vehicle standard requires automobile manufacturers to deliver more vehicles with ultra-low or zero tailpipe emissions for sale in Minnesota, including electric vehicles and plug-in hybrid models.

The governor’s office at the time touted that the new standards would increase consumer choice in Minnesota, noting that despite the fact that many Minnesotans want to drive electric vehicles, manufacturers had historically offered fewer than half of their models in the state, and instead offered them in states that have adopted clean car standards.

At the time, the Minnesota Auto Dealers Association had denounced the decision to impose California car rules on Minnesota. “Minnesota does not have an air quality problem like California’s,” Scott Lambert, president of the association, said in a press release in July 2021. “The California Rule puts California bureaucrats in charge of Minnesota industry, and they will impose an artificial supply mandate on the Minnesota marketplace and put Minnesota on track for an outright ban on the sale of combustible engine vehicles.”

Lambert asserted that incentives and infrastructure are the proven way to get more electric vehicles on the road. “But the governor has done nothing regarding infrastructure, and the California Rule is a pure supply mandate that does not address how to increase demand,” he said.

The shift towards better quality lubricants has resulted in slower growth in demand for esters that are used in lubricants, such as polyol esters and phosphoric acid esters, according to consultancy Kline & Co.

Within the lubricant industry, esters are commonly used in a variety of applications, ranging from industrial lubricants, hydraulics, marine and automotive, to refrigeration, metalworking and wind turbines.

“So the frequency of change of lubricants is going down, and therefore the demand for lubricants is growing slowly, even probably slower than global [gross domestic product] growth we are seeing,” Kunal Mahajan, a project manager in Kline & Co.’s chemicals practice, said during an online webinar on Oct. 11 based on insights from its “Industrial Esters: Market Analysis and Opportunities” report. “Therefore, we are seeing lower growth for polyol esters as well as phosphoric acid esters.”

Mahajan noted that polyol esters, which are among the slowest growing categories, are mainly used in lubricants. Phosphoric acids are also used in lubricants, he added.

Polyol esters, which are based on monobasic acid and polyhydric alcohol, are suited for use at high temperatures but some suffer from poor hydrolytic stability. Complex polyol esters are a combination of diacids and polyol esters, which provide both thermal stability and good viscosity.

Phosphate esters – made from phosphoric acid and alcohol – are fire resistant and hard-wearing but are not miscible with mineral oils. The lubricants industry uses phosphate esters as antiwear additives and as fire-resistant fluids in a variety of applications, from hydraulic and transmission fluids to compressor oils and aircraft lubricants. Phosphate esters are ashless and serve as an alternative to metal-containing additives.

Kline estimated the global industrial esters market value at about $22.3 billion in 2022. Lubricants were about eighth in terms of industrial esters application demand, trailing paints and coatings, food and beverage, adhesives and sealants, personal care, lithium-ion battery and textile.

Among ester categories, acrylic esters led in 2022 with more than one quarter of the global demand, Kline found, followed by carboxylic acid esters, fatty acid esters, carbonic acid esters, polyol esters and sulfonic and sulfuric acid esters. Fatty acid esters are made from animal or vegetable fats and oils and offer good oxidative stability in lubricant applications. Among other applications, some carboxylic acids are used for manufacturing energy-efficient lubricant esters for refrigeration units, such as air conditioners and refrigerators.

China dominated in demand for industrial esters last year, according to Kline, accounting for more than half of demand, followed by Europe, the United States, India and Southeast Asia.

Lubricant maker Azmol-British Petrochemicals has transferred its production activities to Georgia and Uzbekistan after losing control of its factory in Berdyansk, Ukraine, during Russia’s occupation of parts of the country.

At the end of September, Azmol-BP announced that it has entered a toll blending agreement to have its products manufactured at a new factory operated by Marakanda Petroleum in Chinaz, Uzbekistan, 53 kilometers southwest of the capital of Tashkent.

A Marakanda Petroleum representative told Lube Report that the plant started operations in 2022 after being built with help from investors from Uzbekistan and a company from Canada.

Last year Azmol-BP began having products made in Kutaisi, Georgia, at a plant operated by UG Lubricants, formerly Agrinol Kavkaz. That plant, which has production capacity of 36,000 metric tons per year, also makes lubes sold under the Agrinol brand and the German brand Lorf. UG reported sales of 3,000 tons in 2022. In addition to Georgia, UG claims to export lubricants to Kazakhstan, Turkey, Serbia, Iraq, Syria, South Africa and Cambodia.

Marakanda plans to expand, but “at the moment we work with Azmol products only on the market of the Republic of Uzbekistan,” a representative said last week.

The plant has production capacity of 12,000 t/y of motor and industrial oils and features 254 cubic meters of tank park and uses blending technology designed by the Swiss ABB Group.

The migration of the manufacturing of Azmol-BP’s products began after the company’s factory in Berdyansk was caught up in Russia’s February 2022 invasion of Ukraine. Company representatives told Lube Report the plant was taken over by individuals aligned with Alexander Ponomaryov, a member of the country’s parliament. Ponomaryov has been accused by some Ukrainian news organizations of complicity with Russian occupiers but told Radio Free Europe in a recent interview that he was tortured by occupational forces and coerced into cooperating.

The sprawling site in the Azov Sea port city, was once one of the largest grease and lubricant producers in the Soviet Union, but its business shrank significantly in the years following the empire’s break-up.

At one point the plant went dormant for several years, but it was revived after British Petrochemicals invested to turn the company into a 50-50 joint venture. Before the war with Russia began, Azmol-BP claimed that it and Agrinol supplied a combined 8% of the country’s lubricant demand of 200,000 t/y.

The European Automobile Manufacturers Association will probably continue developing automotive engine oil specifications after the European Union prohibits sales of vehicles powered solely by petroleum fuels, according to the chairman of the association’s task force for light-duty lubricants, but the organization is not ready to develop standards for electric vehicle fluids.

Paul Decker-Brentano gave his assessment in July at the Mineral Oil Technology Conference held in Stuttgart by the German Association of Medium-sized Mineral Oil Companies.

The EU has resolved to prohibit sales of new cars and vans powered only by internal combustion engines beginning in 2035, but sales of hybrid vehicles will be permitted, and they contain internal combustion engines that require engine oil. In addition, existing vehicles running only on such engines will continue to operate.

Decker-Brentano therefore envisions that ACEA lubricant task forces will probably develop future sequences beyond 2035. He said he does expect an eventual phaseout of oil industry engagement in Europe would eliminate ACEA oil sequences. But when regional standard setting organizations disappear, the International Fluids Consortium will be the backup. The IFC was formed in 2020 to create a system for global automotive lubricant specs.

The ACEA task force for light-duty lubricants has already discussed the necessity of an industry standard for EV fluids.

“We discussed heavily and are not at the stage now where we can answer the question about that, but I won’t exclude the possibility of an industry standard for EV fluids,” said Decker-Brentano.

Currently the task force doesn’t see the need for such a specification. EV fluids are fill-for-life and require no service. Tier 1 suppliers are also developing their own fluid specification due to different hardware layouts. Decker-Brentano noted each OEM is still building up EV fluid

expertise and working on possible test requirements.

Decker-Brentano noted that European car sales are shifting toward hybrid vehicles and models powered solely by batteries. Original equipment manufacturers are investing more than €250 billion for the transition, and companies such as Mercedes-Benz, Ford and Stellantis are vowing to stop selling conventional cars.

But OEMs are also being challenged on multiple fronts in reaching those goals. Decker-Brentano pointed to the United Kingdom as a strong EV market, but it faces issues in energy generation and charging infrastructure.

“Today we are far behind charging infrastructure plans. We are far behind in energy production. ACEA is saying all the time that there is infrastructure debt, and something has to be done, otherwise transformation will not happen,” said Decker-Brentano.

Competition from foreign OEMs is also an issue. “What makes ACEA members nervous is that in the U.K., Chinese automakers increased sales from 2% to 32% in just two-and-a-half years. There is massive pressure from China in such a big market,” he explained. “We have to defend our competitiveness in the market.”

Decker-Brentano said growth of EV sales will be slower than expected because of that infrastructure debt, and internal combustion engine applications will remain in the European market longer than expected.

After nine months of development, the Union of the European Lubricants Industry and the Technical Association of the European Lubricants Industry published their Methodology for Product Carbon Footprint Calculations for Lubricants and Other Specialties.

Many lubricant companies are feeling increasing pressure from customers, suppliers and investors to provide detailed data on their products’ carbon footprints. The two associations hope that this new methodology with simplify and standardize the calculation process.

UEIL and ATIEL set up a task force in January to devise a harmonized cradle-to-gate product carbon footprint methodology that can be used throughout the European lubricants industry, according to a joint press release from the two associations.

“To be able to determine product carbon footprints for lubricants and other specialties on a common, harmonized basis for the whole European Lubricants Industry is a decisive capability, and we are delighted to have developed it together with ATIEL,” UEIL President Mattia Adani said in a press release.

The methodology is aligned with ISO Standard 14067:2018 and the Greenhouse Gas Protocol product standard. It takes the production of 1 kilogram of unpacked lubricant or other specialty product at the factory outbound gate as the declared unit and reference flow. This could be, for example, production of 1 kg of unpacked SAE 0W-20 engine oil.

A declared unit is an amount of the substance or product that is being studied. The reference flow is the quantity unit of required inputs from a process in a system that is needed to fulfill the functionality of the declared unit.

South Korean lubricants blender Michang Petroleum Industry Co. reported a 43% jump in operating profit on a 2% uptick in sales for the quarter ending June 30.

Operating profit climbed to ₩14.4 billion (U.S. $10.7 million) in the second quarter, compared to ₩10.1 billion in the same period last year.

Hindustan Petroleum Corp. Ltd. reported a 15% bump in lubricant sales for the fiscal year ended March 31, boosted by a 20% rise in sales to the Middle East region and Africa via a subsidiary and expansion of its lube marketing network.

The sales increase represented a rebound from the prior fiscal year, when sales were constrained by factors that included availability of product supplies pursuant to a planned turnaround at its base oil plant in Mumbai.

Owned by India’s central government, HPCL reported lubricant sales of 626,560 metric tons for 2022-2023 fiscal year, compared to 545,200 tons in the 2021-2022 fiscal year. It was also an improvement from 619,610 tons in the 2020-2021 fiscal year. In its annual report, HPCL said it strengthened and widened the geographical reach of its lubes marketing network by adding 36 new channel partners during the fiscal year.

The company said it had achieved its highest-ever sales to countries in the Middle East region and Africa via its Dubai-based, 100%-owned subsidiary, HPCL Middle East FZCO (HMEF). The subsidiary registered sales of 1,221 tons of lubricants, an increase from 1,017 tons.

The company exported 6,000 metric tons to 18 overseas markets during the fiscal year, compared to 8,100 tons to 12 countries in the prior fiscal year.

HPCL estimated India’s total demand for finished lubricants at 2.8 million tons during the fiscal year, with process oils accounting for about one third of the demand.

India’s lubricants and grease consumption declined 16% to 4 million tons for the fiscal year, HPCL estimated, attributing the decrease to a short supply of base oil that mainly due to refinery shutdowns.

The company signed an agreement with a unit of United States-based Chevron Corp. to manufacture and sell its lubricant products in India, the companies announced in March this year. HPCL and Chevron Brands International LLC entered into a long-term trademark licensing agreement, the companies said in the joint statement. The agreement paves the way for Caltex-branded lubricants to be manufactured, distributed, and marketed in India by HPCL. The partnership encompasses the licensing, production, distribution, and marketing of Chevron’s lubricant products under the Caltex brand, according to the statement.

HPCL operates six lubricant blending plants. The Mumbai-based company’s lubes business supplies lubricants and greases to private and government-owned industrial customers, as well as to a network of lube distributors and retail outlets, many of them in the bazaar market.

Its base stock plant – owned jointly with Oil and Natural Gas, which has a 51.1% controlling stake – makes API Groups I, II and III base stocks. It is the largest base oil plant in India.

The European Council has adopted a new directive that will increase use of renewables in overall energy consumption. According to a council press release, the directive demands that by 2030 42.5% of the energy used in the bloc be renewable.

The EU’s updated renewable energy directive’s areas of concern include transport and industry. Member states must now choose between a binding 14.5% reduction in greenhouse gas intensity from transport by using renewables by 2030 or at least 29% of renewables within the final consumption of energy in the transport sector by the same year, the commission said.

The directive includes a sub-target of 5.5% advanced biofuels from non-food sources and renewable fuels such as hydrogen.

“This is a great achievement in the framework of the ´Fit for 55´ package which will help to achieve the EU’s climate goal of reducing EU emissions by at least 55% by 2030. It is a step forward which will contribute to reaching the EU´s climate targets in a fair, cost-effective and competitive way,” said Teresa Ribera, Spain’s acting minister for ecological transition.

North America’s finished lubricant demand is projected to grow at a compound annual rate of 0.8% out to 2032, held back by shrinking consumer demand for automotive lubes, while the South American market is forecast to expand at a 2.5% rate, boosted by rising demand in the consumer and industrial segments, according to consultancy Kline & Co.

“The U.S. and Canada will witness consumer automotive lubricant demand shrink because of electrification and usage of lower viscosity oils that are available as full synthetics,” Sushmita Dutta, a project manager in Kline & Co.’s energy practice said during an Oct. 4 webinar based on insights from its “Global Lubricants: Market Analysis and Opportunities” report. “Oil drain interval extensions will not help the market to grow.”

In North America, the company forecasts lubricants demand to grow at a CAGR of 0.4% by 2027, with demand slightly more in 2032 than in 2027.

The United States lubricant demand over that period is projected to be essentially flat to 2027. A 1% compound annual decline rate for consumer passenger vehicles demand is expected to balance out modest CAGR increases for commercial vehicle lubricant and industrial lubricant demand.

Canada’s lubricant demand is projected to decline at a 1% compound annual decline rate, with a deeper decline of 2% for its consumer vehicle lubricant demand.

In the U.S., the company does expect that the industrial sector and off highway commercial segments will grow because of government policies and initiatives, she said, such as infrastructure and inflation reduction bills and more focus on driving growth in the manufacturing sector to reduce dependence on China.

In North America out to 2027, Mexico’s lubricant demand is expected to achieve almost 3% CAGR, with an industrial lubricants demand growth rate nearing 4%. She noted that Mexico’s projected lubricant demand growth stands out. “That’s because unlike its neighbors, the transit mix does not align with the trends we see in the U.S. and Canada,” Dutta said. She explained that as a developing country, per capita vehicle ownership in Mexico is much lower compared to the U.S., and its per capita two-wheeler ownership is much lower compared to Asian countries such as India and Indonesia. “So there’s a lot of potential to grow vehicle penetration” in Mexico, she added.

Mexico is an important manufacturing country, especially in automotive manufacturing, thanks to proximity to the U.S., she noted.

To 2027, the region’s largest lubricant market, Brazil is expected to have a nearly 2% CAGR in lubricant demand. Leading will be its industrial lubes market, with a CAGR of more than 2.5%. Dutta noted that trends witnessed in Brazil tend to be reflected in the overall South America region. Brazil’s lubricant market declined in 2022 after significant growth in 2021, she said, likening it to what several countries in Europe experienced in 2021 and 2022.

The highest CAGR projected for a country in the South America region is 3% for Peru, led by a nearly 3.5% CAGR for its consumer passenger vehicle lubricants demand. Colombia’s projected CAGR for lube demand is also up near 3% over the period, and its passenger vehicle lube demand CAGR is also up near 3.5%.

Kline projects a more modest CAGR just over 2% for Argentina, led by an industrial lube demand growth rate of nearly 3%.

Chile’s CAGR is projected to be a more modest rate just above 1.5%, with consumer vehicle lubricant demand growth rate forecast to be up near 2%.

Kline estimated global finished automotive and industrial lubricants demand declined 2% to 39 million metric tons in 2022, compared to 40 million tons in 2021, just shy of the pre-pandemic 41 million tons demand in 2019.

COVID-19 impacted the global lubricants market, causing demand to decline in 2019. It rebounded to 40 million tons in 2021, but demand did not reach the pre-pandemic level in 2022. “This happened because in many markets we saw the demand went down in year 2022, especially in Europe and In China, for different reasons,” she said. “Looking forward, the outlook is positive.” Kline estimated that the top five lubricant suppliers in 2022 were Shell, ExxonMobil, BP, TotalEnergies and Chevron. The rest of the top 10 included Sinopec, PetroChina, Fuchs, Idemitsu Kosan and Valvoline.

Low-viscosity motor oils are losing ground in Russia at a time when many Western motor oil and car brands have exited the market, leaving voids filled by Chinese car brands and the heavier oils that they use, according to a Russian consulting firm’s findings.

The Chinese cars gaining popularity in Russia use crankcase lubricants ranging from 5W-30 to 10W-40, and those viscosity grades are dominating the market, according to a study by B2X, a Moscow-based consultancy.

“In Russia, during the past few years we observed growth of sales of low-viscosity oils – 0W-20 or 0W-30 grades,” the study’s author, B2X Managing Partner Anatoliy Filatkin said in a presentation posted on the consultancy’s Telegram channel. “However, we are seeing a U-turn of this trend caused by the retreat of the Western motor oil producers and the change of origin of the new vehicle fleet from European and Korean to Chinese.”

According to the study, 0W grades made up just 4% of passenger car motor oil sales in Moscow and the surrounding area in May of this year, down from 6% in the beginning of 2022.

In contrast, the combined share of 5W-40 and 5W-30 grades was steady over that period at 80%, while the share for 10W-40 products increased from 15% to 17%.

Chinese car brands constituted 56% of new car sales in Russia in September 2023, more than double from their 27% share 12 months earlier, according to a report by Autostat, analytical firm in the Russian automotive sector.

“Thus, Chinese [brands] constitute a majority of all foreign new car sales in the Russian market,” Autostat said. “While in the used car segment, a majority, or more than 50% of total sales, are Japanese-made cars.”

The consultancy also found that in September 2023 Russian models accounted for 34% of new car sales, down from 41% in the same month last year. Russian automakers have been hampered by Western sanctions imposed over the country’s invasion of Ukraine.

Hi-Tech Lubricants’ lubricants segment recorded a net loss and a 26% drop in sales for the fiscal year ending June 30, citing sluggishness in Pakistan’s automobile sector and inflation.

For the fiscal year, Lahore-based Hi-Tech’s lubricants segment reported an Rs 136.7 million net loss (U.S. $482,000) for the fiscal year, a steep decline from an Rs 866.3 million net profit for the prior fiscal year. Hi-Tech noted in its annual report that a reduction in sales revenue led to a negative bottom line performance within the segment. Another factor was a 129% surge in finance costs to Rs 536.8 million, compared to Rs 234.4 million.

The segment’s profit from operations plummeted 64% to Rs 400.1 million, from Rs 1.1 billion.

Lubricants segment revenue fell 26% to Rs 7.4 billion, compared to Rs 9.8 billion, accounting for 48% of the company’s sales for the fiscal year.

Overall, Hi-Tech’s reported consolidated net loss of Rs 247 million for the fiscal year ended June 30, falling from an Rs 617.4 million net profit in the previous fiscal year. Profit from operations plunged 73% to Rs 399.5 million, compared to Rs 1.5 billion.

Net sales for the company as a whole declined 12% to Rs 15.6 billion.

In citing the impacts of sluggishness observed into the automobile sector during the fiscal year period, CEO Hassan Tahir noted the adverse trend was exacerbated by various eternal factors, “including persistent inflationary pressures, a diminishing purchasing power among consumers and the broader economic downtown in Pakistan.” In addition, he said, the devaluation of the national currency, the rupee, added to import costs, further contributing to prevailing inflation.

Hindustan Petroleum Corp. Ltd. plans to create a separate subsidiary for its lubricant business, which it claims is the largest in India, according to a recent report in the Economic Times.

The Mumbai-based news group reported that HPCL Chairman and Managing Director Pushp Kumar Joshi disclosed the plan during an interview last month, saying it was part of a restructuring initiative that will also create a subsidiary for its green energy operations.

A Sept. 6 article quoted Joshi saying the parent company will also consider a stock market listing and other potential steps to facilitate the lubricant business’ growth.

“We are the largest marketer of lubes in India, we have a lubes refinery, so we want to unlock value in this business,” he said.

Asia-Pacific’s finished lubricant demand is projected to grow by a compound annual rate of 0.8% to 2032, with most of that growth occurring in the first half of that period – led by growth in India, South Korea, Indonesia and China – consultancy Kline & Co. projected.

The region remains the largest lubricant market globally, thanks to China and India, the second and third largest lubricant markets, respectively, Sushmita Dutta, a project manager in Kline & Co.’s energy practice said during a webinar on Wednesday. “In this region, demand is going to grow a at CAGR of 1.5% between 2022 and 2027, and after that will remain more or a less stable” out to 2032, Dutta said.

Kline estimated overall global finished automotive and industrial lubricants demand declined 2% to 39 million metric tons in 2022, compared to 40 million tons in 2021, remaining below the pre-pandemic 41 million tons demand in 2019. The webinar, “Annual Review of the Global Lubricants Market,” was based on insights from the company’s “Global Lubricants: Market Analysis and Opportunities” report.

Dutta noted that COVID-19 had a detrimental impact on the global lubricants market, causing demand to go down in 2019. It then recovered to 40 million tons in 2021, but demand did not recover to the pre-pandemic level in 2022. “This happened because in many markets we saw the demand went down in year 2022, especially in Europe and In China, for different reasons,” she said. “Looking forward, the outlook is positive.” Most of the markets are likely to grow out to 2027 and 2032, except Europe, where it is expected to remain essentially flat.”

Out to 2027, Kline projects China’s CAGR will top 1%, led mainly by around a 2.5% CAGR for industrial lubricants and a near 1% growth rate for consumer vehicle lubricants. This is expected to be offset slightly by a slight decline in commercial vehicle lubricant demand, she added.

“What’s interesting about China is in the year 2022, the country saw a double digit [percentage] decrease in its lubricants consumption, and the reason again was a resurgence in COVID cases, strict lockdowns and mobility restrictions, and restrictions on businesses,” Dutta said. “But going forward it is going to be growth, especially demand in 2027 compared to 2022. However, I would like to mention in China because of the demand decrease in year 2022, it will recover quickly in the year 2023 – that’s the expectation. Between 2023 and 2027 there could be a slight decrease. The demand will correct its course and will not continue to grow very fast after 2023.”

In Asia-Pacific, Dutta noted, Japan stands out because it is the only country that is expected to see its lubricant demand shrink over the next five years. “The automotive sector will see a significant decline because of electrification of the transportation sector,” she said. Another factor at the same time will be the increasing usage of 0W engine oils and full synthetic lubricants recommended by some of the leading original equipment manufacturers that are in Japan.

She added that similar to Japan, South Korea will also see its consumer automotive demand shrink because of the vehicle electrification trend, with a 1% compound annual decline projected out to 2027. However, its overall lube demand is expected to grow by a more than 2.5% CAGR, with higher 3% growth rates for consumer and commercial lubricants demand.

According to Kline, India and Indonesia are the bright spots in terms of stronger projections for lubricant demand growth to 2027.

“They will continue to grow despite the electrification of the automotive parc,” Dutta said. Over the time frame, Kline projects India’s consumer lubricants demand will grow by a CAGR of close to 3.5% and the commercial, industrial total lubricant demand to grow at CAGR’s close to 3%. Indonesia’s lubricant demand CAGR is projected to grow at around 2.5% over that time.

Although Kline found that developed nations in North America and Europe have a higher share of synthetic passenger car motor oil demand compared to those in developing regions of Asia-Pacific and South America, synthetics are making strong inroads in several key Asia-Pacific countries.

Dutta noted that South Korea was the country with the highest share of full-synthetics in 2022. Conventional accounts for less than 10% of the country’s PCMO demand. Only the United Kingdom had a higher combined share of synthetics and semi-synthetics.

She pointed out PCMO quality is improving in other key Asia countries – including China, India, Thailand and Indonesia. The combined share of full synthetic and semi-synthetic now accounts for the majority of such demand in China, India and Thailand. That combined share is also making progress in Indonesia, although it accounted for less than half of PCMO demand there in 2022. “So it’s not a predominately conventional market, even in many Asia countries,” she added.

On the heavy-duty motor oil side, Dutta explained the share of synthetics remains low globally because commercial fleets are price-sensitive. “They exhibit reluctance in switching to synthetic products especially if the vehicles are very old, are used a lot, and they change their oil frequently, so they’re not easily persuaded to move toward synthetics.”

The Asian market remains predominantly a conventional HDMO lubricants market, she pointed out, noting that conventional has a significant share in China, Thailand, India and Indonesia. Full synthetics have made inroads in South Korea, although Kline estimated that HDMO type still accounted for substantially less than half of the market there last year.

Kline estimated that the top five lubricant suppliers in 2022 were Shell, ExxonMobil, BP, TotalEnergies and Chevron. The rest of the top 10 included China’s Sinopec and PetroChina, Fuchs, Japan’s Idemitsu Kosan, and Valvoline.

Base oil production in the United States declined 7% in July – continuing a year-long trend – although naphthenic production sported a 5% increase for its first year-on-year improvement this year, according to data released by a government agency last week.

Total base oil output decreased to 4.8 million barrels in July, compared to 5.1 million barrels in the same month last year, the U.S. Energy Information Agency reported. The 4.8 million barrels near the high end for this year, which has ranged between a low of 3.9 million barrels in March and a high of 5.1 million barrels in May.

Historically, the July base oil production volume this year was the lowest production for July since August 2009, when the U.S. only produced 4.5 million barrels.

Year-to-date through July total U.S. base oil production fell 11% to 31.5 million barrels, compared to 35.2 million barrels.

Paraffinic production in the country decreased 8% to 4 million barrels. That marked the third time paraffinic production reached 4 million barrels this year, along with 4.3 million barrels in May and 4.2 million barrels in January.

Naphthenic production reached 767,000 barrels in July, compared to 749,000 barrels. It was the third highest such production this year, behind 789,000 barrels in April and 783,000 barrels in May. That was also the first time such production showed a year-on-year increase in the U.S. since November 2021, when it was up 1% at 783,000 barrels.

Germany’s finished lubricants demand, including process oils, declined 13% in June, continuing a year-long trend of monthly decreases, although sales of motor oil, compressor oil and transformer oils experienced upticks, according to government agency data released Sept. 22.

The country’s lubricant sales decreased to 46,418 metric tons in July, compared to 53,252 tons in the same month last year, Germany’s Federal Office of Economics and Export Control reported.

The steepest declines occurred in hydraulic oils, machine oils and metalworking fluid categories.

Hydraulic demand fell 54% to 4,030 tons, and consumption of machine oils dropped 43% to 1,219 tons.

Lukoil’s lubricant arm intends to build two production facilities at its refining complex in Volgograd, Russia – one to make lubricant additives and the second to produce greases and metalworking fluids – according to documents filed recently with the local government.

On Sept. 12, LLK International, Lukoil’s finished lubricant business, published part of an environmental impact statement filed with the municipal government, stating “discussions are going on with the local government and the public” about plans for the two facilities. The statement said production capacity of the grease and metalworking fluids plant will be 45,000 metric tons per year. The impact assessment is subject to review by local regulators.

Activity in United States base oils market has been lackluster since the start of the year, with demand deemed rather subdued during the spring production cycle when lubricant manufacturers prepare stocks for the busy summer driving season. And unlike in previous years, demand for base oils and lubricants this year lacked brilliance, even when increased numbers of drivers took to the road.

While base oil suppliers prepared for a slowdown in consumption in the fall, they also expected a small uptick in requirements from consumers who have depleted inventories and needed to return to the market to replenish stocks, particularly as buying has been timorous for most of the year. Some buyers also preferred to postpone purchases until the fourth quarter, when prices tend to come under pressure, depending on supply fundamentals and crude oil and feedstock costs.

Despite fairly sluggish base oil demand trends since January, a number of paraffinic base oil producers appeared to be in balanced-to-snug supply positions as September rolled around. This was partly attributed to freshly completed and ongoing turnarounds, along with reduced base oil output in favor of fuels production at a number of refineries as diesel margins strengthened.

Many participants noted that what saved the domestic market from becoming flooded with product was the conclusion of export business. Several transactions were completed over the summer, with U.S. cargoes finding their way to countries within the Americas as well as faraway destinations like South Africa.

Brazil has been one of the bright spots for U.S. exports. With a couple of plants there either currently undergoing a maintenance program or preparing for one, base oil consumers have been concerned about securing sufficient raw materials to continue producing lubricants over the next few months, particularly as there was some uncertainty surrounding the exact duration of the turnarounds.

There was also an uptick in demand from Mexico—where buying activity had been rather lethargic—with buyers seeking light grades for fuel blending. Some end users preferred to wait for prices to be revised in the last quarter of the year, but others have used up existing inventories and could not wait to place orders.

Contrary to previous years when many U.S. cargoes made their way to India in the third and fourth quarters, transactions this year to India were less prevalent and shipments remained more regional, as prices and logistics were considered to be more advantageous. The arbitrage from Asia also seemed closed for the time being, and supply in that region tightened, offering less incentive for Northeast Asian suppliers to ship product to deep-sea destinations in Latin America.

Turnarounds at several U.S. facilities and rerefineries since June also contributed to a tightening of base oil supplies. Chevron and Calumet completed turnarounds in July, and there were reports that Motiva had scheduled a brief turnaround at one of the trains in its Group II/III plant in Texas in late August. The shutdown only affected Group II 600N production, and it did not seem to have a significant impact on general availability.

HollyFrontier will be shutting down its Group I plant in Oklahoma for a 45-day turnaround in mid-September. The producer limited its spot offers to build inventories and utilized more of its base stocks for its own lubricant production, contributing to an overall tightening of Group I grades.

Despite the tightening of domestic base oil supplies and the upward trek in crude oil and feedstock prices in late August and early September, there were no posted price adjustments following increases implemented in the first half of August. The initiatives had raised Group I, Group II and Group II+ postings by 20, 25 and 30 cents per gallon, depending on the grade.

Group III prices remained fairly steady, although numbers were exposed to downward pressure given plentiful supplies and additional domestic production. Importers were heard to be planning to reduce volumes shipped to the U.S. for the rest of the year to minimize price pressure. Furthermore, supply in Asia might be tightening on ongoing turnarounds and reduced operating rates at some refineries.

Many participants also worried about potential supply issues, as August and September are the most active months in terms of hurricanes and tropical storms along the United States Gulf Coast, where many base oil facilities are located. In late August, Hurricane Idalia brought a storm surge, strong winds and flooding in Florida, Georgia and the Carolinas, but no production disruptions were reported.

Naphthenic base oil prices were exposed to upward pressure due to steep crude oil and feedstock values, along with balanced-to-tight supply and demand fundamentals. Accounts whose contracts are linked to a diesel index saw increases given the upward trend in diesel values. Given these conditions, it was not surprising that in mid-September, San Joaquin Refining communicated a 30 cents-per-gallon increase on its naphthenic base oils, effective September 15. The producer also raised export prices on the same date, as export business into Latin America and Asia was robust.

At the time of writing, other naphthenic producers were contemplating price adjustments and watched crude oil price developments closely, particularly since values were on the rise following Russia’s and Saudi Arabia’s announcement that they would extend their oil production cuts until the end of the year.

Several factors seemed to have helped keep the base oil supply overhang in check during the third quarter, and producers’ decisions were likely to be contingent on some of these same elements over the next three months.