Functional fluids, which include lubricant oils, are heavily dependent upon end-use industries like automotive, transportation and industrial machinery, among others. Industrial, commercial and consumer lubricants witnessed steady deterioration in business climate. While decline in industrial production, manufacturing output, automotive production, mining and construction activities negatively impacted industrial lubricants, decline in the number of vehicle miles traveled, and the resulting longer drain intervals, and lower new vehicle sales, as a result of weakening employment rates, consumer income and spending power elicited erosion in demand for consumer lubricants. Lower disposable incomes and higher fuel prices have kept consumers off-road with the passion for SUVs cooling, thus exacerbating the decline in vehicle miles driven.
The meltdown in the construction industry and the sharp decline in new construction projects translated into lower lubricant oil consumption in the construction industry. The financial crisis led economic recession has come down especially hard on the transportation industry including the marine transportation sector, thus crippling the commercial lubricants sector. The slowdown in freight hauling, trucking and logistics pinched demand for specialty heavy-duty motor oil (HDMO). Marine shipping witnessed the maximum impact with freezing of consumer spending in the United States and slowing levels of economic activity resulting in the collapse of global production and trade. The recession has predominantly been transmitted across all regional boundaries through the international trade system and trade linkages beginning with the U.S. trade flows. The breakdown in trade activities in turn resulted in a large number of ships anchored empty and idling in harbors and ports, thus indirectly impacting sales of marine lubricants. Marine lubricants being the most negotiable item on the platter, the fall in shipping rates additionally squeezed the operating margins and profitability of marine lubricant producers as ship owners turned towards squarely focusing their efforts on reducing operating costs.
Demand for metalworking fluids is typically driven by manufacturing of base metals and formed metal and fabricated metal products i.e. structural steel, automotive body panels, etc., and the slowdown in manufacturing output, not surprisingly impacted demand for metalworking fluids. Global demand for Metal Working Fluids is expected to increase at a sluggish pace during the 2007 through 2015 period. The scaling back of production in the automotive industry played instrumental roles in dragging down opportunities for process oils/fluids.
While industrial and commercial lubricants suffered the worst, consumer automotive lubricants witnessed a cushioned fall in comparison as fuel prices are subsidized in most countries and car purchases are incentivized by most governments. Downward revisions of fuel prices, although temporary, prevented any steep declines in car driving. However, existing pre-recession challenges, such as, increased preference for synthetics, migration towards automatic transmissions, gearboxes and transaxles, which are filled-for-life components, lengthening drain intervals, will in the upcoming years double up to make the business environment challenging for players in this space. Due to the ability of synthetic alternatives to reduce maintenance time and downtime costs by increasing the drain intervals, synthetic fluids have emerged as the preferred choice among fleet operators on a cost cutting drive. A culmination of the aforementioned factors produces a mixed bag of current challenges and future opportunities for the functional fluids market worldwide.
Europe and Asia-Pacific together account for a major share of the global Functional Fluids market, as stated by the new market research report. While demand has softened across all regional markets, developing countries like China and India have performed relatively better, given the undeterred pace of industrialization. For instance, functional fluids market in Germany and Russia withered, given the heavy dependence of their export markets on manufactured goods, chemicals, automotives, machinery, metals, oils, and minerals. In comparison, the Chinese and Indian markets have been fairly resilient with strong domestic demand in most industrial sectors. Revenues for Hydraulic and Transmission Fluids market in Asia-Pacific are expected to surge at a CAGR of 3.2 percent through 2015.
Major players in the marketplace include BASF SE, BP PLC, Chem-Ecol, Chevron Corporation, Cimcool, CLC Lubricants Company, Croda International, Dow Chemical Company, Dow Corning Corp, ExxonMobil, Fuchs Petrolub, Gulf Oil Limited Partnership, Hatco Corporation, Houghton International, Idemitsu Kosan Co Ltd, J.D. Streett & Co Inc, Kluber Lubrication Munchen KG, Parker Hannifin Corporation, Permatex, Prestone, Radiator Specialty, Royal Dutch Shell Plc, Warren Oil Company Inc, Yushiro Chemical Industry, among others.
The research report titled "Functional Fluids: A Global Strategic Business Report", announced by Global Industry Analysts, Inc., provides a comprehensive review of market trends, issues, drivers, company profiles, mergers, acquisitions and other strategic industry activities. The report provides market estimates and projections (in US$ millions) for major geographic markets including the United States, Canada, Japan, Europe (France, Germany, Italy, United Kingdom, Spain, Russia and rest of Europe), Asia-Pacific, Middle East and Latin America. Product segments analyzed include Hydraulic and Transmission Fluids, Heat Transfer Fluids, Process Oils, Metal Working Fluids and Other Functional Fluids.
For more details about this comprehensive market research report, visit www.strategyr.com/Functional_Fluids_Market_Report.asp.
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