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November 16, 2016

Volume 17 Issue 52

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German Use of Industrial Lubes to Fall

BERLIN – Germany’s lubricant market is the second largest in Europe in large part because of its large industrial base, but the country’s demand for many industrial lubes will probably shrink in coming years due to shifts in the global economy and adoption of higher performing products, an industry observer told a conference here last month.

Stephan Baumgartel, managing director of the German Lubricants Manufacturers Association (VSI), predicted that domestic demand for several key categories of lubes will fall by 10 percent to 15 percent by 2025.

Mercedes' passenger car body press shop

Photo: Mercedes

Mercedes’ passenger car body press shop in Kuppenheim, Germany. The German Lubricants Manufacturers Association projects a decrease in metalworking fluid demand from domestic automakers.

“For most industrial lubes, we are expecting declining demand in Germany,” he told the Annual Congress of the Union of the European Lubricants Industry (UEIL) Oct. 27.

At roughly 1 million metric tons per year, Germany is the world’s seventh-largest lube market and the second-largest in Europe, behind only Russia. Baumgartel, who is VSI’s managing director, said the size and profile of the German market owes to its outsized industrial base. The country ranks third globally in industrial output, just ahead of Japan with output of €2 trillion (U.S. $2.2 trillion) in 2014.

That represented 23 percent of Germany’s total gross national product that year, easily the highest ratio in the world. The two biggest pillars of Germany’s industrial base – the automobile and mechanical engineering sectors – are both large consumers of lubricants, as are metal production and metal products, which are a bit smaller.

But economic activity, a reliable barometer of lubricant demand, is shifting away from Germany and the West. Asia accounted for just over a third of global GDP between 2011 and 2018 but is forecast to account for approximately 55 percent from 2041 to 2050. Over that same period of time, Europe’s share of global GDP will decline from nearly 30 percent to less than 20 percent.

Germany faces disadvantages that will hamper the competitiveness of its domestic industrial operations – one of the world’s fastest-shrinking labor forces and high costs for electricity and natural gas. Baumgartel believes German manufacturers can continue to prosper, but it is only logical for them to move some operations overseas, and that will help depress domestic lube consumption. Output from German original equipment manufacturers is projected to grow at a cumulative annual rate of 5 percent through 2025, but production abroad – which was already 68 percent larger in 2014 – is projected to grow at a 34 percent clip.

Based on growing output, metalworking fluid demand from Germany’s automobile industry would be expected to grow at a cumulative annual rate of 3 percent through 2025, all other factors remaining the same. But Baumgartel predicted demand by OEMs and their suppliers will actually decrease a total of 15 percent over that period due to several factors, including environmental awareness and increased efficiency in lubricant use; growing popularity of dry-machining and minimum quantity lubrication; and increasing use of electric powertrains.

Similarly, Baumgartel predicted that Germany’s demand for hydraulic fluids will fall 17 percent by 2025 due to growing popularity of electric drives and a push to conserve resources. Grease demand for bearings and constant velocity joints will decrease 13 percent due to adoption of products allowing longer drain intervals.

He did single out one category of industrial lubes as likely to buck the broader trend. Domestic demand for industrial gear oils is likely to rise, he said, because of growing numbers of wind turbines and the shipping industry’s shift toward biodegradable marine lubes