ILMA Compoundings June 2019 - 16

INDUSTRY RUNDOWN

Market Report
What's Driving the
Heavyweights?
Understanding the factors
shaping opportunities in
the commercial vehicle
lubricant market
By Sharbel Luzuriaga
As the commercial vehicle market works to meet efficiency and emissions requirements, Sharbel Luzuriaga,
project manager at Kline Energy, looks at the different
factors influencing the future outlook for heavy-duty
motor oils in the world's two largest markets.
Combined, the demand from China and the U.S. for
heavy-duty motor oil (HDMO) represents 35% of the
global market. While these two heavyweight markets are
being driven by some of the same technology and economic
disruptors, there are also a number of key differences shaping their futures. Although declining volumes are forecast
in both regions, HDMO suppliers who are aware of the
disparate challenges will be well-placed to take advantage of
the emerging opportunities.
US HDMO MARKET TRENDING TO LOWER
VISCOSITY GRADES
In the U.S., across the classes, from the lightest to heavyduty and off-highway, there are estimated to be more than
21 million commercial vehicles in operation. While some
70% of these are on-highway, the more than 1,300 kilotons
(KT) demand for HDMO is split almost 50/50 between onand off-highway applications.
Commercial vehicle sales between 2013 and 2018 have
grown at a compound annual growth rate (CAGR) of 8%.
This is a trend that is expected to continue as we look forward over the next five years. However, lubricant demand is
forecasted to fall, albeit only modestly in the coming years.

16

JUNE 2019

| COMPOUNDINGS | ILMA.ORG

When looking at the factors affecting lubricant demand,
electrification is anticipated to play only a relatively small
part. Light commercial vehicles (LCVs), used, for example,
in last-mile urban deliveries, are more easily electrified than
the heavier classes. However, in the next 20 years, only
one-third of LCVs in the U.S. are expected to be electrified,
while in the medium- and heavy-duty sectors, electrification
will still be in the single figures in this time period. As the
medium- and heavy-duty markets look for cleaner technologies, what is far more likely to occur is the use of natural
gas and hydrogen as an alternative to diesel fuel. However,
currently, the main barriers to their broad uptake are similar
to electrification: the lack of infrastructure, high initial
vehicle purchase cost and poor return on investment.
NEW FUELS AND TECH PROVIDE OPPORTUNITY
In the transition to new fuels and technologies, end users
will look for lubricants to help them simplify inventory,
minimize misapplication and reduce costs. Lubricant suppliers who can ensure enough protection across mixed-fuel
fleets will have an advantage in this market.
Emissions reduction and fuel economy measures will have
the most impact on the U.S. HDMO market. Currently,
SAE 15W-40 is still the most consumed HDMO grade, and
the uptake of lower viscosity API FA-4 SAE 10W-30 oils
has been slow. With the implementation of the next round
of greenhouse gas emissions cuts and as large fleet owners
appreciate the benefits they can deliver, the penetration
of lower viscosity grades SAE 5W-30 and SAE 10W-30 is
expected to gradually increase. As fleets replace vehicles,
they will look for suppliers with lower viscosity lubricant
offerings that can deliver proven hardware protection over
longer oil drain intervals (ODI).
Q-UP EXPECTED IN CHINA
The market in China is very different to that of the U.S. Of
the more than 93 million commercial vehicles in operation,
some 70% are in off-highway use, mainly in agricultural and
construction applications. However, these vehicles account
for only 25% of the 1,800 KT HDMO market, which
means demand from the on-highway segment in China is
twice the size of that in the U.S.
However, the Chinese on-highway market makeup is very
different to that of the U.S., with almost 70% of the vehicles


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ILMA Compoundings June 2019

Table of Contents for the Digital Edition of ILMA Compoundings June 2019

ILMA Compoundings June 2019 - Cover1
ILMA Compoundings June 2019 - Cover2
ILMA Compoundings June 2019 - 1
ILMA Compoundings June 2019 - 2
ILMA Compoundings June 2019 - 3
ILMA Compoundings June 2019 - 4
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