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Going digital


Digitisation appears to split the experts; blockchain in particular. Some see digital marketplaces, blockchain, telemetry and AI coming of age for the lubes industry. Christian Hartman states: “Digital marketplaces will have the greatest impact to the industry within the next decade. All kind of sensoric technology will influence tribulogic aspects, including “upgrading lubricants” instead of changing them. Blockchain applications will increase in “big” applications.”


“Group I base oil will just about disappear, and could disappear altogether as a marine oil, due to falling prices and intense competition from the oversupply of base oils. As a result, Group II will become the Group I replacement.”


David Wright, Director General of the UKLA, echoes this and predicts “synthetic lubricants will form the majority of base oil for industrial and metalworking applications as the rationalisation of Group I refineries means shortages of traditional base oil and brightstock, with a second Group II base oil plant being established in Eastern Europe to satisfy rising demand across the EU.”


Others however are more sceptical. Jim Douglas, for example, cites the undelivered promise of RFID (Radio Frequency Identification) on supply chain efficiencies. I have sympathy with this view, having seen how long it took big data to really take hold in retail and it’s still not really changed the fundamentals. My advice is to invest wisely, keep experimenting and build a good ecosystem with tech and consulting businesses in areas such as oil analysis, stock management and recycling.


Base instincts


When it comes to base oil predictions, Blake Eskew from IHS Markit offers this summary: “Base oil production will continue to move through the capital replacement cycle that has been in progress since the late 1980s, driven by the economic and product quality advantages of hydroprocessing versus solvent processing technology. Greater availability of high-quality base oil will encourage more rapid spread of more stringent lubricant specifications globally, leading to smaller differences across regions and improved performance in all markets.”


Meanwhile OATS Technical Consulting and OEM Manager, Paul Stephenson, states: “Group III will overtake Group II base oil because it ‘does more’ in terms of quality, while Group IV base oil will continue to expand but at a slower pace than Group III because of production constraints.


Change is gonna come So there is a clear consensus that the industry faces significant external forces. Bio-based synthetic lubricants will increasingly replace petroleum and Group II and III base oil prices will reduce through increased supply, even as the overall finished lubricant market starts to contract due to less automotive demand. This will be balanced somewhat by industrial and process lubricant demand increasing, particularly in Asia and Africa.


Product innovation will be driven by changes in automotive engine technology and environmental demands but there will be fewer engine oils as products move to monograde (ultra-low viscosity).


The past decade or more has seen a highly successful and profitable lubricants industry; still relatively fragmented, undisrupted and without the need for significant adaptation. That’s about to change!


The 2020s are going to be a much tougher and more disruptive decade, requiring brave and adaptive decision-making. Those prepared to step up to the challenge are going to love it.


Oh, and Lewis Hamilton will equal Michael Schumacher’s seven F1 driver’s championship wins in 2020. That’s a dead cert!


LINK www.oats.co.uk


LUBE MAGAZINE NO.155 FEBRUARY 2020


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