June 22, 2016
Volume 17 Issue 52
Afton Chemical Invests in Brazil
Afton Chemical Corp. announced plans for a new petroleum additive facility in Brazil that can handle both lubricant and fuel additives, and is expected to become operational by mid-2017. The investment cost was not disclosed.
The facility will at Bayer Industrial Park in Belford Roxo, Rio de Janeiro. It will be operated by Afton Chemical Industria de Aditivos Ltda, a Brazil-based subsidiary of Afton.
“This investment reflects our commitment to this key strategic, growing market,” said Pablo Blazquez, Afton’s vice president of the Americas, in a news release. “Since the acquisition of Texaco Additives businesses and facilities in 1996, Afton has established a significant presence in Brazil’s petroleum additives market.”
The new facility in Rio de Janeiro will help the company continue developing partnerships and deploying its products in Brazil and the Latin America region, the company said, noting that the facility will be scalable to support future market growth
An Afton representative explained to Lube Report that while passenger car engines in Brazil tend to be smaller and flex-fuel – running on fuels containing between 25 percent and 100 percent ethanol – those factors do not currently impact the requirements for lubricants there.
“The market is influenced by both North American and European [original equipment manufacturer], so API and ACEA specs are important,” the representative said. “The heavy duty engine oil fleet is mostly influenced by European technology and tends to operate under more severe conditions than in Europe: high temperatures, more challenging roads and higher loads all contribute to generate a severe service which tends to reflect in shorter oil drain intervals.”
Brazil is the largest lubricants and fuels market in Latin America. “It is a significant market at the global level with a strong and long-standing OEM presence,” the representative said.
Sergio Rebelo, managing director for Factor de Solução, consultancy Kline & Co.’s affiliate company in Latin America, told Lube Report the lube additives market in South America overall is estimated at about 280,000 tons per year to 300,000 t/y, with Brazil accounting for about 55 percent of that.
According to Rebelo, Kline estimated the finished lubricant market in Brazil – excluding process oils – at almost 1.2 million tons in 2015, down 6.1 percent from 2014 levels. Although Brazil last year accounted for 55 percent of South America’s lube demand, largest in the region, he noted that its volumes declined in 2015 as a result of the ongoing economic crisis in the country.
“In 2016, we expect a further retraction between 4 percent and 6 percent,” he said. “The consumer and industrial markets were the most affected by the crisis in 2015, and are expected to have difficulty recovering in 2016.”
Brazil’s finished lubricants market is still expected to post a 1.2 percent compound annual growth rate from 2015, to 2020, Rebelo said.
The new facility complements and expands Afton’s current footprint in Latin America, where it has subsidiaries in Brazil, Mexico, Argentina and Venezuela.