Industrial Gear Oils (Mineral and Synthetic) Market size is forecast to reach US$5.2 billion by 2027, after growing at a CAGR of 3.8% during the year 2022-2027. Industrial mineral gear oils have a shorter service life and are less resistant to aging and high temperatures than synthetic oils. At the same operating temperature, oil change intervals can be three to five times longer depending on the base oil (SHC or PAG). In a gearbox, synthetic oils have a lower friction coefficient and a better viscosity-temperature relationship than mineral oils. This allows for the use of synthetics at lower viscosity grades and the possibility of lower oil temperature during operation. Synthetic oils are also more efficient than mineral oils, according to tests. In the study, a polyglycol oil performed the best, with an efficiency of 18% higher than a high-performance mineral gear oil. The test gears were also eight to nine percent more efficient after using SHC gear oil. Approximate oil change intervals of gear oils at an operating temperature of 176°F (80°C) are mineral oil: 5,000 operating hours, synthetic hydrocarbon oils (SHC) oil: 15,000 operating hours, and polyglycols (PAG) oil: 25,000 operating hours. Thus, owing to all these extensive characteristics of synthetic gear oils, the demand for synthetic base oils such as poly-alpha-olefin (PAO), PAO/ester blend, ester-based Oils, and more is increasing as feedstock material. Furthermore, more severe operating environments and higher performance expectations are driving the rapid growth of synthetic industrial gear oils. Smaller sump sizes put more strain on oils, while modern machines operate at higher loads, faster speeds, and higher operating temperatures.
The transportation industry is flourishing globally. For instance, according to the World Economic Forum, the civil aerospace sector increased and reached US$263 billion in 2020 and the military aerospace sector increased and reached US$253 billion in 2020 (from the 2009 level). According to the United Nations Conference on Trade and Development (UNCTAD), in the 12 months to 1 January 2021, the global commercial shipping fleet grew by 3 percent – to 99,800 ships of 100 gross tons and above, equivalent to 2,134,639,907 dwt of capacity. With the increasing transportation industry, the demand for gear components and assemble manufacturing machine lubricants is also rising, as a result of which there is a subsequent increase in demand for industrial gear oils. Industrial gear oils are used in the aerospace & defense sector as it provides outstanding service in terms of equipment protection, ensure the reliability of aircraft's transmissions, despite operating under extremely challenging conditions, problem-free operation, provide outstanding performance in extreme service applications at high and low temperatures, and more. According to Boeing Commercial Market Outlook 2021-2040, North America will need 9,160 new airplane deliveries by 2040, while Latin America will need 2,530 new airplane deliveries. Europe, Middle East, Asia-Pacific, and Africa region will require 8705, 3000, 8945, and 1030 new airplane deliveries by the end of 2040. In 2021, the Pentagon asked for US$52.4 billion to invest in the military’s air domain in the fiscal year 2022. Of that total, the Defense Department wants US$12 billion to buy 85 F-35 Joint Strike Fighters. Such a defense budget is anticipated to contribute to the growth of the defense aircraft sector in the coming years. Thus, it is evident that the aerospace industry is set to grow over the coming years. As a result of which the market for industrial gear oils will also be flourished during the forecast period. The purpose of the industrial gear oil in the marine industry is to provide an oil protective film to the contact surface of the moving parts (gears) and to absorb the heat generated during their operation by them. The gearbox will most likely fail if the oil levels are reduced. In the marine industry, industrial gear oil is used to meet the needs of outboard gear cases and stern drive units. It offers excellent protection from cold start to operating temperatures, making gear selection and engagement easier and more comfortable. In March 2021, Seaspan Shipyards started full-rate construction of the Offshore Oceanographic Science Vessel (OOSV). This significant milestone marks the start of Seaspan's third class of ships under the National Shipbuilding Strategy (NSS). In March 2020, Brazilian state-controlled company Empresa Gerencial de Projetos Navais (EMGEPRON) awarded the Águas Azuis consortium to debut construction of the first of four ships in 2021 for commissioning in 2024. With the increasing marine industry, the demand for industrial gear oil for proper ship maintenance is also increasing. Thus, it is anticipated that the demand for industrial gear oils will rise, owing to the flourishing marine sector in various regions.
The COVID-19 outbreak led to major economic problems and challenges. As a result of the COVID-19 pandemic, several industries such as aerospace, marine, construction, oil & gas, steel, and wind power. agriculture and mining industries across regions had to shut down their operations, and services as countries adopted partial or absolute lockdown policies to deal with the pandemic, due to which, the industrial gear oil manufacturers experienced a huge loss in terms of revenue. According to the International Monetary Fund (IMF), the GDP growth declined in various countries such as the United Kingdom, Germany, Brazil, Japan, United States, Saudi Arabia, Nigeria, and more as a result of the economic impact of COVID-19. The government announced strict measures to slow the spread of the coronavirus, owing to which the regional economic activities slowed down and GDP declined, causing widespread concern and economic hardship for the industrial gear oil industry. Numerous wind energy projects remained unresolved as a consequence of the lack of funding in various regions. The wind energy industry also encountered adversity such as supply chain risks, subcontractor and material shortages, and contract terminations to cut costs, which curbed the industrial gear oil market growth during the forecast period. For instance, wind project construction in New Jersey, New York, Pennsylvania, and Michigan was halted in 2020. According to the American Wind Energy Association (AWEA), due to the COVID-19 economic slowdown, planned US wind power projects totaling 25 gigawatts (GW) are in danger of being delayed, scaled back, or scrapped entirely by April 2020. Due to this decrease in wind energy project activities, the demand for wind energy gear oils significantly reduced. In addition, building and construction activities were temporarily halted in a variety of destinations due to the coronavirus global epidemic. According to the Office for National Statistics, the construction industry was 11.6 percent lower in July 2020 than it was in February 2020. In August 2020, construction production was 10.8 percent lower than it had been in February 2020. In response to the Japanese government's declaration of an expanded state of emergency over the COVID-19 outbreak, major Japanese building contractors such as Kajima Corporation, Obayashi Corporation, and Taisei Corporation halted building projects nationwide until early May 2020. With the temporary decrease in construction activities, the demand for construction equipment and machinery had significantly fallen, which had an immediate major impact on the industrial gear oil market in 2020. Also, the production of aerospace, marine, and locomotives was hindered which further contributed to industrial gear oils market revenue shrinkage in 2020. Furthermore, as countries adopted partial or complete lockdown policies to deal with the pandemic, industrial gear oil manufacturers temporarily shut down their production facilities and services, impeding the production of industrial gear oil, which had a significant impact on the industrial gear oil market revenue in 2020. However, governments took steps to rekindle the industrial economy momentum, as a result of which the prospects for the industrial gear oil market gradually improved as a direct consequence in 2021-2022.
Asia-Pacific held the largest share in the industrial gear oils market. The Asia-Pacific economy is driven by the growth of the industrial sectors which include wind power, oil & gas, chemical, mining, steel, transportation, construction, and more. These industrial sectors are growing at a rapid pace in the Asia-Pacific region. For instance, according to the World Steel Association, China is the global leader in the manufacturing of crude steel. In 2020 the crude steel production in China was 1 064.8 million tons, an increase of about 7% when compared with 2019. In September 2021, Airbus and Tata Aircraft formed a partnership for the manufacturing of aircraft in India. The construction of the new facility will begin by the end of 2022 and will be completed by the end of 2023. The new chemical industry factory development in South Korea is benefiting the chemical industry growth in the country. For instance, in 2021, construction started on the Posco lithium hydroxide factory in South Korea. This facility will be constructed by the end of 2023. In December 2021, the Australian government invested AUD 2 billion (US$2.25 billion) in the development of a wind farm in Melbourne, Australia. The development of the new wind farm is scheduled to begin by the end of 2022. In 2019, the construction of a new coal mine began in Australia. Initial investments in the project reached over A$800 million (US$ 554 million). The project is scheduled to be operational by 2023. Hence, the growth of such mining projects in Australia will monetarily benefit the market growth. For instance, In September 2021, the construction of a new fishing training ship that complies with international standards began in Taiwan. The government of Taiwan invested NT$840 million (US$30.2 million) for its construction. The project is expected to be completed in 2023. Moreover, in September 2020, the expansion work started for the Datan Power Plant in Taiwan. It is a gas power generation plant. The expansion of this project will be completed by the year 2024. Therefore, the surging industrial sectors which include wind power, oil & gas, chemical, mining, steel, transportation, construction, and more are accelerating the industrial gear oils market growth in the Asia-Pacific region.
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Industrial Gear Oils (Mineral and Synthetic) Market Growth Drivers:
Higher Demand for Synthetic Gear Oils for Harsher Environments
Gear systems are becoming more complex, with finely finished surfaces and highly accurate cut teeth. They're also smaller, which means they put more strain on the teeth and bearings. In surface-hardened gears, these loads, combined with vibration and shock, can cause frequent gear pitting (particularly micropitting). Furthermore, the systems operate at higher temperatures. All of these factors necessitate the use of a high-quality lubricant. While modern mineral-oil lubricants perform well, synthetic gear oils have several advantages, including improved thermal and oxidation resistance, which allows for considerably longer oil life and deployment at high temperatures; improved viscosity-temperature for improved performance and wear protection at extreme temperatures. In addition, it offers enhanced low-temperature properties for better wear protection and reduced churning losses; and improved low-temperature properties for better wear protection and reduced churning losses. Increased gear efficiency, lower power requirements, lower oil temperature, longer component life; and more. Thus, it is evident that industrial gear oils provide higher performance than ever despite operating in harsher environments. Henceforth, to meet the high demand for synthetic gear oils for harsher environments, formulators are modifying their formulation strategies to harness synthetic base stock in their new industrial gear oils, thereby significantly driving the market growth.
Rapidly Expanding Construction Equipment and Machinery Market
Industrial gear oil is often used in construction equipment and machinery such as cranes, excavators, concrete mixers, bulldozers, and more as it prevents gear rusting and corrosion and demonstrates excellent lubricity. Industrial Gear oil has load resistance, anti-corrosion, anti-oxidation, and anti-foam properties for differentials and manually operated transmissions, resulting in smooth gear shifts under all driving conditions. The industrial gear oil contributes to smooth gear operation and ensures high machine performance when used in hydraulic excavators' travel reduction and swing reduction gears. Thus, industrial gear oils are a vital component of construction equipment and machinery. The construction equipment and machinery market are expanding at a rapid pace. For illustration, according to the Indian Construction Equipment Manufacturers’ Association (iCEMA), in FY20-21, the Indian Construction and Equipment Industry grew by 9% YoY, owing to strong infrastructure demand in the second half of the fiscal year. However, this growth was achieved on a low base, as the CE industry experienced a (-)13 percent decline in FY19-20 due to the economy's slowdown. According to the SANY Heavy Industry 2020 annual report, the SANY excavator generated sales revenue of US$5.721 billion, up 35.85% year on year. Excavator production will exceed 90,000 units in 2020. Meanwhile, SANY concrete machinery had a sales revenue of US$4.124 billion, up 16.6% year on year. Furthermore, SANY hoisting machinery had a sales revenue of US$2.959 billion, up 38.84 percent year on year, SANY piling machinery's sales revenue increased by 41.9 percent year over year to US$$1.04 billion. Sales revenues for road machinery increased by 30.59 percent to US$430 million. According to the Committee for European Construction Equipment (CECE) Annual Economic Report 2022, in 2021, there were consistent trends across the equipment sub-sectors, with sales increasing by 22 percent to 30 percent in all product segments. The strongest growth was seen in concrete machinery, which was slightly higher than the other sectors. Thus, it is anticipated that with the rapidly expanding construction equipment and machinery market, the demand for lubricants is also rising, as a consequence of which the industrial gear oil market is flourishing.
The Major Players in this Market Include
The major companies in the industrial gear oils (mineral and synthetic) market include Shell PLC, Petronas Lubricants International, BP PLC, Phillips 66, China Petroleum & Chemical Corporation (Sinopec Corp.), TotalEnergies, Chevron Corporation, Exxon Mobil Corporation, ENEOS Corporation, and Fuchs Group. The key focus of the companies has shifted towards geographical expansion, acquisition, and product launches.
In January 2021, Shell PLC, CSW Industrials, Inc., and Pennzoil-Quaker State Company dba SOPUS products ("Shell"), a wholly-owned subsidiary of Shell Oil Company that is responsible for Shell's lubricants business in the United States, announced the signing of a definitive agreement under which Whitmore Manufacturing, a wholly-owned subsidiary of CSWI, and Shell will form a joint venture ("JV") to distribute, market, and sell lubricants, coolants, reliability products, greases, and related industrial services to the North America rail and U.S. mining sectors.
In March 2020, Shell Indonesia announced plans to expand the capacity of its world-class lubricants oil blending plant (LOBP) in Marunda Centre, Indonesia, near Jakarta. The plant will be able to produce up to 300 million liters of finished lubricants yearly once it is completed on the 9-hectare site. Pennzoil, Quaker State, FormulaShell, Shell TELLUS, Shell RIMULA, Shell ROTELLA T, Shell SPIRAX, Shell Gadus, and Jiffy Lube® are among Shell Lubricants' high-quality trademarks. With this expansion, the company plans to meet the growing demand for lubricants in the domestic market, as well as contribute to the progress of Indonesia's downstream industry. In February 2020, PETRONAS Arbor, a fully developed range of lubricants specifically designed for agricultural and construction machines, has been launched by Petronas Lubricants International (PLI). The PETRONAS Arbor product line includes hydraulic and gear oils, greases, and antifreeze, ensuring that the entire machine is protected.
In January 2020, JXTG Nippon Oil & Energy Corporation announced that it has established a lubricants sales entity, JX Nippon Oil and Energy Philippines Corporation, in the Philippines, to expand its lubricants business in local markets, which includes automotive lubricants, industrial lubricants, metalworking fluids, greases, marine lubricants, and industrial & private-use engine oils. The new sales entity's operations started in January 2020. In July 2019, Groupe Renault and BP, through its global lubricant business Castrol, expanded their strategic alliance, which began in 2017 with a Formula 1 partnership. BP and Castrol have extended their partnership with the Renault F1 Team until 2024, supplying advanced fuels and engine oil, gear and hydraulic oils, greases and brake fluid, as well as a variety of high-performance industrial lubricants to the Team's technical centers in Enstone for the chassis and Viry-Châtillon for the engine.
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