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December 9, 2014

Volume 7 Issue 3

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Biolubes Small in Asia, Have Potential

Although Asia is a major producer of biolubricant feedstocks, it is a very minor market for the finished products, with demand that pales compared to Europe and the Americas. However, biolubricant suppliers say Asian demand could take off if prices come into line and regulations are put in place.   

According to a recent Kline & Co. report, the United States and Europe consume an estimated 250,000 to 300,000 metric tons of biolubricants per year – between 80 and 90 percent of global supply. Asia and the rest of the world account for the remaining balance, the U.S. consulting firm said. 

“The relatively limited uptake for biolubricants [in Asia] is due to lack of regulation and domestic labels, lack of high-performing formulations that are on par with conventional lubricants, high prices and lack of suitable additives,” the report, “Opportunities in Biolubricants,”  contended. 

William Pu, director of Malaysian bio-lubricant blender Solution Biogen Sdn Bhd, concurred with that analysis. 

“There are not many blenders putting up biolubricant products at competitive cost, and there is simply not sufficient expenditure on research to utilize the available base oil,” Pu told Lube Report Asia in an interview. “In the absence of regulations to spur the use, cost would be a major stumbling block due to the current premium nature of the biolubricant base oil.” 

Sources noted that price is a primary factor for lubricant purchasing decisions throughout much of Asia. 

“In Hong Kong and China, price is the main factor, so I doubt people will pay a higher price to use biolubricant products,” said Hong Kong-based Andrew Gaw, director of United Oil Asia Pacific Company Ltd., an independent lubricant manufacturer headquartered in Singapore. 

According to estimates published by market research firm Frost & Sullivan earlier this year, revenue from Southeast Asia’s oleochemicals, used to make fatty acids and fatty alcohols that are building blocks for biolubricant production, will more than double from 2013 to 2020. 

Apart from pricing, Kline’s report suggested other barriers impeding the growth of Asia’s biolubricants demand, including inadequate infrastructure, such as storage tanks, and the fact that “original equipment manufacturers would need to adjust engines to accommodate biolubricants.” 

Biolubricant players agree with the Kline that for demand growth in Asia will require development of high-performance, cost-competitive products supported by regulation and industry interest. 

“Chemical registration policies not only in the European Union and the U.S., but also in China, should play a crucial role in incentivizing greater adoption of biolubricants in the near future, maybe also in other Asian countries,” said Apu Gosalia, head of global competitive intelligence and chief sustainability officer of Fuchs Petrolub SE, of Mannheim, Germany. Fuchs is the world’s largest independent lubricant manufacturer and Germany’s biggest biolubricant manufacturer. 

“Asia will catch up, although the take-up is slow,” Pu said. “There are no lasting initiatives from the governing bodies, and there is no particular work safety or environmental safety regulations that could actually lead to the increase in biolubricant consumption. This is a major intervention that the industry needs that is not yet in place.” 

Another challenge, Gosalia said, is “the lack of environmental awareness in such countries, which remains low versus mature continents such as Europe and North America. Even in the more developed countries we see that voluntary change to biolubricants is not distinct without strict recommendations or legislation by authorities.” 

Things are improving in Malaysia. “We are seeing more demand from the metalworking industry requesting our product information concerning biolubricants from us,” Pu said. “As a formulator, we think that it is a good indicator that, although at a premium, there is now more realization of the need for safer working environment.”

Eventually, “Biolubricants will continue to replace conventional lubricants through ongoing product development and wider distribution,” Kline’s report said. “Growth rates of biolubricants vary in line with region of operation with mature markets in Europe growing at slower pace than emerging markets in Asia as these markets continue to mirror European regulation, including green labels and public procurement.”