"Growth of synthetic lubricants to drive industry growth"
The global poly alpha olefin (PAO) market size exceeded USD 1.0 billion in 2015. Its growing demand in synthetic lubricants on account of reduced engine wear and tear is expected to remain a key factor driving the industry growth.
The benefits of poly alpha olefin include improved thermal and oxidative stability, excellent hydrolytic stability, demulsibility, and very low pour point. These properties make PAO a good selection in temperature extremes, including high operating temperatures, and low startup temperatures.
Rising usage of synthetic over oil-based fluids in offshore drilling activities owing to stringent regulations and environment protection mandates is expected to increase the demand over the forecast period.
Growing synthetic lubricant demand from various end-use industries including automotive and oil & gas is projected to remain a key driving factor for the market. PAOs are primarily employed as metal working fluids, compressor oils, engine oils, heat transfer fluids, transmission oils and gear oils to provide seal protection, reduce component failure, and to increase drain intervals.
The drive in the automotive industry to improve fuel efficiency and reduce emissions, which is achieved by using very high-quality base stocks, such as PAO, is increasing in automotive lubricant formulations.
Volatility in prices of essential raw materials is expected to remain a key challenge for industry participants. Increasing oil production in the OPEC countries and the U.S. and Russia is anticipated to ensure continuous raw material supply for alpha olefins production.
Different technologies and procedures are used for manufacturing poly alpha olefin. These technologies have been patented by various key market players. Extensive research for the development of alpha olefins manufacturing technologies had been carried out in the past and is also being done presently, which in turn will fuel the poly alpha olefin industry growth over the forecast period.
U.S. poly alpha olefin (PAO) market revenue by application, 2014 - 2025 (USD Million)
"Engine oil was the leading application segment in 2015"
PAO had high penetration in the engine oil application segment and accounted for over 65% of the overall market in 2015, owing to its ability to lubricate at both ends of the temperature spectrum, flowing more quickly at cold temperatures while resisting oil consumption, viscosity breakdown, sludging and oxidation at high temperature.
Gear oil is anticipated to witness high growth over the forecast period, owing to a higher degree of hydrolytic stability & demulsibility, a higher viscosity index (VI) and a lower pour point. Synthetic gear oil is used to meet application requirements such as at very low or high temperatures, extremely high loads, and extraordinary ambient conditions.
Synthetic greases containing PAO are often employed in equipment operating in outdoor conditions owing to their supreme performance & temperature properties. They can also be specially formulated to withstand exposure to excessive moisture.
"Europe was the leading regional market followed by North America"
North America poly alpha olefin market held over 30% of the global revenue in 2015. Shale gas boom, particularly in the U.S., has provided new hope for petrochemical producers and has hit the production of ethylene, a key raw material for PAO production, in the region.
Biodegradable hydraulic fluids are becoming more important globally. Two primary regulations for biodegradable oils in Europe include The Blue Angel Scheme and The White Swan Scheme, which supports biodegradable base oils, and are anticipated to drive the regional industry. Asia Pacific is anticipated to witness the fastest growth over the forecast period owing to the growing automotive lubricants demand in the region.
"Integration and own patented technology to drive industry competitiveness"
The presence of main industry players, such as ExxonMobil Corp., Chevron Phillips Chemical Company LP, and INEOS Oligomers, has their own patented technology for PAO production which has driven the market globally, especially in North America.
The industry has witnessed a high level of integration from major industry participants. Primary key members, such as Shell Chemicals, Chevron Phillips, Q-Chem., and Sasol have integrated their operations across the value chain from production and supply of raw materials to end-use products.
Such level of integration enables these companies to cut down raw material procurement costs and strengthen their presence across various end-use industries. Key market players have their own patented technology for manufacturing poly alpha olefin and thus are present in every level of the value chain.
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