Five Energy Trends That Will Define 2023

Five Energy Trends That Will Define 2023

Kline’s team of experts has identified the trends most likely to gain traction in the energy industry in 2023. Here’s a quick look, but be sure to request the full trends report so you’re well-prepared for the new year. 

1. Sustainability In Action: The Generation of Regeneration
Waste oils from used automotive and industrial applications are no longer an inconvenience to be dumped but a new source of thermal energy a valuable raw material to be processed for regeneration, re-refining, and re-use, restoring the base oil components of waste lubricants

2. On the Move: The Metamorphosis of Mobility
Innovation in personal mobility is driving metamorphosis in the automotive (electric vehicle) sector

3. Digitalization: Interpreting and Embedding   
Digitalization was presented as a “silver bullet” at the 2022 World Economic Forum — the panacea to help industries fulfill all 17 of the United Nations’ 2030 Sustainable Development Goals. But the challenge of translating the concept into action at all levels within organizations remains

4. Exploring Adjacencies: Immersion Cooling Fluids
Suppliers of coolants should seek opportunities beyond automotive in the applications linked to higher growth outside of the traditional markets, where their molecules could find new value opportunities. 

5. Sustainability: Measure and Manage
Sustainability continues to be a key driver of innovation across the lubricants and energy sectors, impelled by the international regulatory and legislative landscape to move to a net-zero economy by 2050.


Kline is uniquely positioned to deliver forward-looking, data-driven insights and strategies in the energy industry. We harness the power of our industry expertise with advanced skillsets and AI tools to bring more certainty to the future. Learn more about our predictive insights and forecasting solutions.  

Major Trends in Lubricants How the Landscape is Shifting In Favor

Major Trends in Lubricants: How the Landscape is Shifting In Favor of ILMAs

This year's ILMA Engage event saw industry experts gather in Fort Lauderdale, Florida, to share insights on the lubricants industry's biggest trends. Among them: George Morvey, Industry Manager of Kline's Energy sector, who took the stage to discuss "How the Landscape is Shifting in Favor of ILMAs.


Kline’s M&A Spotlight: OQ Chemicals

Kline’s M&A Spotlight: OQ Chemicals

Commencing with this article, each month we will shine our spotlight on a confirmed or potential M&A candidate, sharing our point of view – and expertise – on the opportunities that we see. This month, in our inaugural offering, we focus on OQ Chemicals and its potential divestiture by parent company OQ.  


OQ, an integrated energy company that is wholly owned by the Government of Oman, is currently considering divesting OQ Chemicals (formerly known as Oxea), a German company that it acquired eight years ago from private-equity owner Advent International for slightly over USD 2 billion. At the time of purchase, Oman sought to tap into increasing demand for oxo-based chemicals.  


OQ is now looking to use its energy assets to raise money and reduce a budget deficit that skyrocketed during the COVID-19 pandemic, which severely impacted oil prices and tourism within Oman. To help offset the negative effects of the economic downturn, the company initiated a number of OpEx (operating expenditure) and CapEx (capital expenditure) optimization projects. In divesting OQ Chemicals, OQ, like Saudi Aramco and other Gulf oil producers, seeks to capitalize on a rebound in crude prices to attract foreign investors. Discussions about the potential divestiture of OQ Chemicals are ongoing, although there is no certainty that they will result in a sale. 

Positioning and Performance 

OQ Chemicals, a leading manufacturer of oxo-intermediates and oxo derivatives, is recognized for its integrated production platform of oxo aldehydes and oxo aldehyde derivatives such as oxo-alcohols, polyols, acids, esters, and amines. These products are used in the manufacturing of a wide range of products, including paints, coatings, adhesives, lubricant additives, cosmetics, pharmaceuticals, flavorings and fragrances, printing inks, plastics, and animal-feed products. Among OQ Chemicals’ downstream oxo derivative products, its amines and esters have the highest rolled margin. 

Kline’s M&A Spotlight: OQ Chemicals

OQ Chemicals’ business achieved net revenue of 1.056 billion euros in 2020. Earnings before interest, taxes, depreciation, and amortization (EBITDA) were in excess of 10% in each of the company’s segments, with an overall average of 12%. 

Kline’s M&A Spotlight: OQ Chemicals

Why We Consider OQ Chemicals an Attractive Purchase 

“OQ Chemicals has a growing international footprint, with strategically positioned production sites in which it has made significant investments,” says Hardeep Parmar, Vice President of the firm’s global M&A and Corporate Development practice. The company serves attractive growth markets in attractive regions, making it quite nimble.” OQ Chemicals is also very technically astute, observes Parmar. 

Kline’s M&A Spotlight: OQ Chemicals

“Another factor very much working to OQ Chemicals’ advantage is that the field in which it competes is not very crowded,” says Dilip Chandwani, Head of Kline Management Consulting’s Process Industries and Manufacturing Competitiveness practices. The company is one of the four leading producers of oxo intermediates and oxo derivatives globally among top players like BASF, Eastman, and Grupa Azoty. 

Potential Risks 

It’s not yet clear what effect the Ukraine/Russia war will have on the industry. "Germany,” says Parmar, “where OQ Chemicals has two manufacturing plants, is vulnerable to Russia disrupting — or even completely halting — the country’s supply of natural gas due to Germany’s refusal to pay for its supply in rubles.” Germany currently obtains more than 50% of its natural gas from Russia and has stated that it will not achieve full independence from Russian supplies before mid-2024. As such, Parmar believes that oxo-alcohol prices will likely continue to rise, particularly in Europe. 

Parmar also sees potential challenges stemming from the cyclical markets OQ Chemicals serves, in addition to the availability of raw materials, price sensitivities, and increasing competition in Asia. 

Possible Suitors 

Because it already has a presence and strong brand awareness in Asia, OQ Chemicals may appeal to a major feedstock producer looking to go downstream. Private-equity firms may also be interested in supporting OQ Chemicals’ growth into a global stand-alone player.  

How We Can Help Potential Acquirers Vet This Opportunity 

Kline has a strong appreciation of oxo-aldehyde and derivatives including alcohols, polyols, acids, esters, and amines through end-use application markets. We may be the only specialty chemicals consultancy worldwide that has access to experts across the entire value chain, from raw materials and products to end-consumer markets. Our technical and commercial capabilities across the value chain enable us to support clients in assessing opportunities for growth within this space, identifying risks, and mitigating against risks.  

Our analysis capability includes assessing: 

  • Competitive technical and market landscapes 
  • End application markets and customers 
  • Technology and operational benchmarking  
  • Growth opportunities
  • R&D activities 
  • Business models 

About our M&A practice 

Kline’s M&A practice provides advisory services for buy- and sell-side mandates, in addition to project finance support. Services are built around integrated competency platforms that include acquisition-led growth strategies, commercial and technical due diligence, manufacturing competitiveness, deal origination, and capital-raising support. 

About this article 

Kline’s M&A Spotlight: OQ Chemicals contains insights from Hardeep Parmar and Dilip Chandwani. 

Parmar, Vice President of the firm’s global M&A and Corporate Development practice, has worked with Kline for approximately seven years and holds specific expertise in commercial engagements across the chemicals value chain. Her experience includes delivering buy- and sell-side due diligence support, in addition to independent market consulting services through to strategic growth assignments. Prior to Kline, Parmar spent more than 15 years in chemicals consulting, working with clients in Europe, the Middle East, and Asia.  

Chandwani heads Kline Management Consulting’s Process Industries and Manufacturing Competitiveness practices. He has more than 40 years of experience in a variety of process and manufacturing industries and has assisted numerous clients with market analysis, technology and manufacturing competitiveness, performance improvement, and identifying/evaluating new business opportunities. During his 30 years with Kline, Chandwani has helped clients grow their business and improve profitability.  

Press inquiries 
Lance Debler 
Content Marketing Manager  
Kline & Company  

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Asian Women in Business

Asian Women in Business: How a Kline Consultant is Breaking Barriers

Breaking barriers, challenging tradition, and exceeding expectations – Kline Consultant Liya Zeng talked about all that, and much more, as a panelist at the ICBS Asia Business Club's discussion on "Women in Business" last week. 

The group, which provides resources and networking opportunities for students interested in business topics and career opportunities in Asia, exists under the umbrella of Imperial College Business School (ICBS) in London, from which Zeng received an M.S. in Management. And, as she detailed during the panel discussion, her road to higher education and the life she wanted to lead wasn’t exactly a smooth one. 

“I'm from a very small town – like a Tier-6 town – in Guangdong Province in Mainland China, and my family is quite traditional,” recounted Zeng, who now lives in London. “In traditional Asian families, girls are told what they can do and what they cannot do.”  The “can’t do’s” included things as benign as whistling in public (it wasn’t “ladylike”), while the “can do’s” included learning to cook (after all, a girl would someday have to take care of a husband and children). 

With such limited plans for Zeng’s future, it may come as a surprise that her family had little issue with her desire to attend college (but just wait – there’s a catch). At first, Zeng enrolled at a pharmaceutical university as a nursing major before swiftly realizing her interests lay in business. But in China, a change in studies isn’t easy.

“I couldn’t transfer to any other program except one – it was an exchange program focusing on international marketing,” she recalled. Her first three years of college would take place in China, and the last would occur in the United Kingdom – a prospect that brought its own set of challenges.


“I had been in a small town for the first 20 years of my life,” Zeng said. “I hadn’t been to any other country – I hadn’t even been to any other province. I’d never traveled anywhere. And, of course, my parents didn’t believe it was okay for a girl to travel alone.” 

But travel alone she did. During her studies in Leicester, Zeng followed the path of management consulting after being inspired by a professor; after graduation, she stayed in the U.K. for an accounting internship, then went back to China for another internship at Deloitte Consulting. Along the way, she decided that a master’s degree would be imperative to obtaining work as a consultant, so she began “secretly” applying to programs. 

Why the covertness? Zeng said she knew her parents would oppose her intentions because a master’s would be overkill; while they supported her endeavors to obtain an undergraduate degree – remember that catch? – they didn’t think she’d actually use it.

“My dad was fine with an education, but he said that a career isn’t important,” Zeng recalled. “He said, ‘You should just get a guy and get married – that's the most important thing.’ And I said, ‘Even if I get married, I still need my career, right?’ And he said, ‘You don’t have to. If you marry a man who is rich enough, you can just be a housewife.’ That’s the kind of environment a lot of Asian females grew up in.”

Before long, though, Zeng’s father came around and endorsed her pursuit of a master’s in the U.K.; her mother, not so much.

“She told me, ‘If you were a boy, I would support you – but you are a girl,” Zeng remembered.  

Tough words, but they caused no acrimony.  “In China – or maybe South China – parents are more willing to invest in boys rather than girls,” Zeng said. “It’s very hard to blame my parents for how they felt, because they grew up in that environment.  I understand them, and I know where their beliefs come from.”


Despite her mother’s objections, Zeng headed for Imperial College. She got her master’s degree and, in July 2019, was hired as a consultant in the Energy practice of Kline & Company. Immediately, Zeng knew she was at the right place.

“I’ve got two bosses who are female. Kline is very good on that end – or I’m just lucky with Yana and Annie,” Zeng said, referring to Vice President of Energy Yana Wilkinson and Vice President of Energy Management Consulting Annie Jarquin.  

Probably a little of both: As we proudly touted on International Women’s Day earlier this month, 54% of Kline's top leadership is female, and a full 100% of Kline's industry verticals are led by women.

Asian Women in Business

Liya, second from right, at the “Women in Business” panel discussion 

It was Wilkinson, in fact, who once helped Zeng over a major hurdle in her life – a story she recounted at the "Women in Business" discussion when asked how she balances her career with family. 

“My mom was not well last year – she needed a major operation – so I was struggling a bit,” Zeng recalled.  “I wanted to go back to China to take care of her. Yana supported me. She said, ‘Yes, you should go.’ So in the end, I managed to get to China for five months to stay with my mom, and I continued working, remotely, until she recuperated.” 

With such strong female support, Zeng told the ICBS audience, she felt immediately welcomed as a female professional. And despite initial trepidations about being a newcomer in London, Zeng said the capital of the U.K. turned out to be “a very diverse city where there’s a lot of inclusion, and people respect each other.” Instead, perhaps surprisingly, she said her biggest challenges come from the person you might least expect: herself.


“It was not easy for me to change my mindset, personally, to go from a girl to a businesswoman,” Zeng said. “In Asian culture, we were taught that you should not be too aggressive, and that influenced me. At first, I was relatively quiet – I thought that I had to observe what other people were saying, what other people were thinking, instead of talking myself. Even now, I sometimes have trouble when I want to speak up; I’m still learning to overcome this mental barrier. And I want to encourage everyone who has had similar experiences to be brave, to challenge traditions and challenge that mentality.”

“Women are never alone in this mental dilemma – a lot of us deal with it,” she continued, before noting that even her Kline contemporaries have had challenges working in the Energy sector, which is predominantly male. “Yana and Annie are my role models – they’ve shared their own stories with me. They had to make a lot of effort to achieve what they have today.” 

Zeng has help other than that from Wilkinson and Jarquin.

“I'm reading a book called Nice Girls Don’t Get the Corner Office. In it, the writer gives a model,” she said, before laughing at her use of the word “model” and noting that it comes from her consultant’s mindset.  “There are four main steps in the writer’s model, and the first step is being aware. The first step for change is always awareness. And now I’m aware of my own behavior and thinking, so I can gradually make more changes. I look forward to implementing all of them – making myself an experiment and seeing many more changes in me and my career.”

And with that evolution, the girl who was once forbidden to even whistle is singing a happy tune – all while ensuring that she shares everything she’s learned with other women. In fact, she’s on the executive committee for Chinese Women in the City (CWIC), a non-profit organization of 500+ members that empowers female professionals of Chinese heritage. She also established a club called Chinese Consultants in the U.K., which has 100+ members of Chinese consultants working in the management/strategy consulting area.

“Our events focus on the challenges women face in the business world, how to empower women, and how to fit in despite cultural differences and gender issues,” Zeng said. “And most of all, we talk about how, someday, we’ll finally break the glass ceiling.”

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EVs and personal mobility

What’s Next in Personal Mobility


With 2021 in the rearview mirror, Kline is identifying which trends will impact the new year, bringing heretofore unseen changes and curveballs.Among the most significant: the end of the ICE (internal combustion engine) age for personal mobility in most parts of the world, triggered by the increasing popularity of EVs (electric vehicles) as consumers demand cleaner, greener options in their now-substantial interest in sustainability.  But with progress comes challenges: a rapid expansion of charging infrastructure is essential, and oil companies now face several threats, including the inevitable contraction in their fuel and lubricants businesses.

So what, exactly, will comprise the charging infrastructure? And how will oil companies respond to their new dilemmas? Kline answers those questions in What’s Next in Personal Mobility: A Look Into 2022 and Beyond, in addition to providing an overview of digital technology — and more.


chips shortage

When the (Micro) Chips Are Down, Being Overly Smart Doesn’t Help

If there were an award for strongest trending topics in 2021, semiconductors would be among the top contenders.

Rightly so, considering their use in so many applications, such as automobiles, wireless communications, personal computers, servers, and electromedical and various other digital technologies. As the “smartness” quotient in end-use applications continues to climb, chip demand similarly continues to experience robust growth. The COVID-19 pandemic served to further bolster this momentum, as remote operations of manufacturing and service sectors placed even greater demands on connectivity and digital hardware — to the point where manufacturers began stockpiling chips for the integrated circuits (ICs). In contrast, the just-in-time (JIT) modelled supply chains of the automotive sector froze the procurement of chips during the initial lockdown phases of the pandemic.

As the automotive sector began recovering in the second half of 2020, the industry was forced to compete with other growing end users of semi-conductors, the supplies of which were impacted due to the pandemic-fueled factory shutdowns in countries like Malaysia. Even after chip manufacturing operations resumed in Q4 2020, supplies failed to keep up with the burgeoning demand — despite the maximization of utilization rates of global manufacturing assets. Unfortunately, industry pundits do not expect the situation to be resolved anytime soon.

Automotive Electronification

Over the last two decades, original equipment manufacturers (OEMs) have been working relentlessly toward transforming their automobiles from primarily mechanical machines to electronic devices. Integration of electronics in the vehicle hardware, like the drivetrain, controllers, infotainment, ACES (autonomous, connected, electric, and shared) mobility, and safety systems — for expanding the vehicle functionality and optimizing performance and safety, while complying with emission norms — necessitated the increased use of semiconductor chips. This trend is apparent from the growing content of semiconductor chips in automotive electronics over the last five years.


Total automotive semiconductor market

SOURCE: IC Insights
IC: integrated circuits; OSD: optical, sensors and discrete.

Further, growing penetration of battery electric vehicles (BEVs) and hybrids — which incorporate a greater number of integrated circuits and sensors and, consequently, higher semiconductor content — will further amplify the stress on the chip supply chains.



semiconductor by powertrain

SOURCE: Infineon.
Other include semiconductor content in body, chassis, safety and infotainment, opto, small-signal discretes, and memory

Despite the strong recovery in demand, automotive production has been severely impacted by the unavailability of chips, with many global and regional OEMs — like Toyota, Honda, Ford, GM, Tata, and Nio — announcing production cuts or complete shutdowns of select assembly plants. LMC Automotive forecasts a decline of 8% in light vehicle sales in 2021. Further, due to the expected longer recovery path, light vehicle sales for 2022 and 2023 have also been revised downward, by 8% and 3%, respectively. These developments will have a profound impact on the entire automotive value chain. According to AlixPartners, a consulting firm, the semiconductor chip shortage will lead to a loss of USD 210 billion for the global automotive industry in 2021.



Impact on the Lubricant Industry

Looking forward, the lubricant industry will not be immune to changes in the automotive industry; both automotive and industrial lubricants will be adversely affected. This will have strong implications for the lubricant suppliers, against the backdrop of changes in customer ambitions, preferences, and buying considerations.

On the B2B front, the volumetric impact on factory fill volumes for engine oil, transmission fluids, grease, coolants, and other lubricants will be immediate and certain due to its direct correlation with automobile production. In addition, the demand for factory maintenance fluids and metalworking fluids (MWFs) in assembly plants and auto-component manufacturing facilities will be gradual and uneven — depending on the structure, operations and maintenance, and supply chains of OEMs and auto-component manufacturers.

Typically, the production line is comprised of a complex integration of many rotating pieces of equipment and machines, ranging from CNC machine tools to hydraulic and geared motor systems to compressors to robotics. Based on the operation, manufacturers use a combination of central lubrication reservoirs and isolated sumps for lubricating equipment. Low utilization or partial shutdown of the plant does not directly translate into a clear, measured decline in demand for factory maintenance fluids or MWFs. In the case of the latter, calculations for modelling the impact are more complex due to defined shelf life, which is governed by biological activity and individual company practices/processes for producing machined parts. Among MWFs, the impact on straight oils and premium water-miscible removal and forming fluids will be relatively easily to decipher due to higher application-specific end-use and independent reservoirs. The impact on conventional MWFs might vary depending on the auto-component supply chains and sourcing models of the OEMs. Preventive and treating fluids will be impacted to the extent of their exposure in the metal auto-components industry and mandates issued by automotive OEMs to the component suppliers for fluid use.

Trends in the automotive industry will have a cascading impact on the upstream raw material industries, like metals, rubber, and plastics, where the demand for general industrial oils and process oils will be affected. Further, the slowdown in the processing industries will have a direct impact on the extraction industries, like mining, refining, and petrochemicals, where the lower utilization rates will affect the consumption of the various lubricants used in both stationary and mobile rotating equipment.

On the B2C front, the implications will be broader. The longer wait times, along with rising input costs, including fuel, will have repercussions on the market for new automobiles and the aftermarkets. All these factors will play on the customer’s mind, resulting in contraction of the pool of new buyers, or buyers being forced to compromise on their original purchase aspirations, i.e., selecting either a pre-owned vehicle, or a low-tiered model of the OEM, or choosing a different OEM in the same vehicle category. These changes will all impact the demand for automotive lubricants — volumetrically and qualitatively. Sales of light-viscosity premium engine oils like 0Ws and 5Ws will be impacted as customers opt for heavier and economical grades of engine oils, while maximizing the life of their new vehicles or newly acquired used ones. Similarly, the use of premium greases utilized in fill-for-life components and in transmission fluids will be affected.

Channel volumetric flows will also not be immune to these changes. OEM dealerships will suffer losses in their service business or will experience a dispersion of the in-warranty vehicle footfalls as customers shift their OEM preferences for purchase of new vehicles, depending on the waiting period. The used-car market is also experiencing structural shifts in many regions, with the rapid expansion of the organized business, along with the ratio of new-vehicle sales versus preowned vehicles increasingly skewing toward the latter. The IWS channel will clearly benefit from the growth in average life of the vehicles due to this short-term trend. Further, as the business models of used-vehicle providers mature, they will expand their value-added services, including vehicle maintenance and services to customers, which will emerge as an important channel for lubricant sales.

The table that follows provides a simplified view of the impact the semiconductor shortage will have on lubricant consumption in various end-use sectors, along with the type of lubricants impacted. The scale and length of impact for lubricants will vary depending on the structure and profile of the customers that comprise the end-use sector, the operational and sourcing practices, and, ultimately, the business exposure to the automotive value chain.



Through ongoing research, Kline’s Energy team continues to expand its understanding of the interplay between various end-use sectors and applications of lubricants for simulating the real-time impact of these industry developments on the lubricants industry and adjacencies in the short, medium, and long terms. We are continuing to track various developments linked to the evolution of the ecosystems, specific customer needs, technology advancements, digitalization, and sustainability for defining the existing and new opportunities, in order to support the growth ambitions of our industry and clients.

About this article:

When the Chips are Down, Being Overly Smart Doesn’t Help features insights from Satyan Gupta, a director in Kline & Company’s Energy sector. Gupta, who is based in the firm’s Delhi office, has more than 13 years of management consulting experience in areas such as new market entry and feasibility, channel and customer acquisition strategy, market-opportunity mapping, and price and sustainability analysis. Prior to joining Kline, Gupta worked in the Natural Gas industry as a technical-commercial consultant.

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The Impact of the COVID-19 Pandemic on the Global Lubricants Industry

The Impact of the COVID-19 Pandemic on the Global Lubricants Industry

Key Takeaways 

  1. COVID-19 could last from six to 18 months worldwide
  2. Economic impacts are already severe, and evolving national policies will impact the shape and duration of economic recovery
  3. Oil markets are in free fall, with transportation fuels hit hardest
  4. Based on our analysis of the market situation at time of writing this article, 2020 lubricants consumption could drop by at least 15%, and perhaps even up to 30%, from 2019 levels with PCMO most impacted
  5. Adverse lubricants market signals could extend beyond 2020 if COVID-19 persists or social distancing becomes embedded in corporate behaviors

Impact of COVID-19 on Oil and Lubricants market

How Did We Get Here? 

The COVID-19 pandemic, which started in China in November 2019, now afflicts much of the world. What will be its immediate and lasting impacts on the global economy and, specifically, on the lubricants industry? In a series of articles over the next weeks, Kline will analyze the impacts of this pandemic on various dimensions of the global lubricants, base oils, and additives industries. 

The story of the spread of SARS-CoV-2, the virus that causes COVID-19, has been widely told and does not need repeating here. What is now clear is that the virus is highly transmissible and has a higher mortality rate than seasonal influenza. There are currently no medicines or vaccines to fight the disease. The only effective weapon at present is social distancing, imposed by various means, to slow transmission of the disease. 

At best, it would seem that radical measures adopted worldwide could contain the impact of COVID-19 to mid-year (a lifecycle of a little over six months). Just as likely, based on the history of previoupandemics such as the Spanish flu and Swine flu, its extent could persist for up to 18 months, lasting into 2021. 

The Economic Consequences 

COVID-19, and the restrictions put in place to inhibit its spread, will have massive and potentially long-lasting consequences. Governments are responding with measures to stimulate economies, assure liquidity, and soften impacts on the...

[pardot-form id="14921" title="Energy COVID-19 Impact on Lube Markets Article Request"]

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synthetic and natural wax

Strengthening Sustainability Efforts Move the Goalposts in The Wax Industry

The economic and health crises of 2020 have caused energy market participants to refocus their attention on protecting the global ecosystem and regeneration — and now, the global wax industry is doing its part to move toward cleaner, sustainable, and circular products.  

As the volume of petroleum wax continues to diminish, crude oil-derived petroleum waxes and non-petroleum synthetic and natural waxes are stepping up to fill supply gaps in the wax industry. But how well will these waxes align with the drive toward global sustainability? Are there more sustainable substitutes? And are consumer preferences changing in favor of end-products with low carbon footprints and recyclable? 

Petroleum wax, which is the workhorse for the wax industry, is produced as a byproduct of Group I base oil production as well as via solvent dewaxing of heavy waxy crude. The supply of Group I base oil-derived wax, which is associated with Group I base oil production, is declining due to declining demand for Group I base oils. The demand for Group I base oils is declining as the automotive and industrial lubricant applications transition toward more efficient lubricants formulated from higher-quality base oils. It is estimated that in the next 10-year period, base oil supply by wax-producing Group I plants will reduce to half of its current volume and, in the long-term — by perhaps 2050 — the supply will further reduce to nearly one-third of the current volume. This will have drastic implications on the supply of petroleum waxes, leaving the world short of nearly 1.5-2.0 million tonnes of gross Group I base oil-associated slack wax production. 

Wax and Group I Base Oil Supply Trend

Crude oil-derived petroleum waxes, produced by massive petrochemical refineries in Northeast China, have historically helped in softening the blow of Group I base oil-derived petroleum waxes capacity closures. These refineries will continue to supply petroleum waxes in the mid- to long-term future to partially fill the gap created by the loss of base oil-derived waxes. 

But which waxes are most sustainable? According to Kline's research, those produced via synthetic and natural processes may have an edge in the long-term future. Synthetic waxes that are derived from natural gas, such as those produced via Fischer-Tropsch (FT) process and polymerization of ethylene, have relatively lower carbon footprints compared to crude oil or coal-derived waxes.  These waxes are also free from toxic impurities such as polycyclic aromatic hydrocarbons, sulfur, and heavy metals, which may be found in petroleum waxes.  

Polyethylene (PE) waxes currently upstage other synthetic waxes when it comes to offering innovative sustainable products. Byproduct PE waxes that are produced via thermal cracking of waste plastics replace the “end-of-life” concept with “regeneration” in the plastics industry — one of the most vexed industries for waste generation. Although thermal cracking of waste plastics into oils and waxes has existed for years, the technology is regaining focus as a viable solution for tackling global waste plastics issues. New players are entering this market, with GreenMantra and Clariter being the most recently established.  

waste plastics into oils and waxes

The wax market is also currently seeing the introduction of revolutionary bio-based PE waxes. This type of wax, produced from plant-sourced ethanol, a 100% renewable source, can assist end users in reduce their carbon footprints when used in applications such as adhesives, cosmetics, coatings, and PCV compounding. In June 2021, Braskem, a Brazilian petrochemical company, introduced a sugarcane ethanol-based bio-PE wax product to its I'm green™ branded product portfolio. Demand for such products in the future will be driven by PVC manufacturers who are introducing bio-based PVC products to their portfolios and are looking for bio-based solutions for PVC lubrication. Bio-based PVC technology has recently surfaced, with eminent PVC manufacturer INEOS’ INOVYN business at the forefront with its BIOVYN branded bio-PVC products. 

Natural waxes that are produced from renewable plant-based sources and carry a green label on them, such as palm and soy, are doing exceptionally well in candle applications. These waxes are also gaining steam in cosmetics, food-based packaging, and coatings applications, driven by their suitability for food contact. Natural waxes have historically advanced only in application areas that consume softer waxes due to their lower melting points. However, the growing desire of wax consumers to use sustainable ingredients in other applications that have been traditionally served by harder, high melt-point waxes will drive their demand in the long term. Clariant’s Licocare rice bran wax, which is targeted at high-melt applications such as engineering thermoplastics and masterbatches, is an example of this trend. 

How will the wax industry acclimate to the new sustainable and circular environment? What roadblocks could slow down the adoption of waxes with low-carbon footprints?

The wax market has historically exhibited versatility and adeptness in absorbing non-petroleum waxes in the absence of a sufficient supply of petroleum wax. In the future, it is estimated that wax customers in traditional candles or board sizing applications — who are sensitive to changes in supply or price of wax — will experience a more significant impact. These applications will find it tougher to transition toward more expensive alternatives to petroleum wax, such as FT waxes. These applications are driven by end-consumer preference, have low barriers to entry, and are vulnerable to substitution in the long run. In contrast, rheological and surface applications such as PVC, hot-melt adhesives, masterbatches, inks, paints, and coating are higher-value applications that offer higher barriers to entry. Rheological and surface applications also have the ability to pay higher prices for waxes. In the long run, these applications will exhibit higher flexibility to absorb cleaner or sustainable products, such as synthetic waxes or even chemically modified plant-sourced waxes, which are typically more expensive. 

Another foreseeable challenge in transitioning toward clean and sustainable waxes could arise due to the raw material limitations for these waxes. Both synthetic and plant-sourced natural waxes could see supply limitations in the long-term future for several reasons. For one, in FT waxes, nearly half of the global supply is met by Chinese coal-to-liquids (CTL) plants, which convert coal to syn gas for producing waxes and other products. These plants are not likely to see any capacity additions beyond 2030 as China tightens its carbon emission limits to meet its carbon neutrality targets by 2060. Other synthetic wax suppliers, such as thermal degradation PE producers, may see lower volumetric growth due to raw material issues. The raw materials (plastic waste) that these plants consume are non-uniform in nature, resulting in lower quality of finished products. While these waxes may be able to meet the circular economy objective, they may not achieve the required quality standards for several applications. 

Vegetable oil-derived waxes may seem to be checking all the boxes, as they are plant-sourced. However, they will also have their own limitations in the future. Growth in palm plantations, from which palm wax is derived, has been termed as “the other oil spill,” as it has resulted in large-scale deforestation of tropical forest land in Asia. Negative consumer sentiments associated with palm plantations are likely to hamper the growth in palm waxes in the future. Meanwhile, soy waxes —produced from soy oil — are seeing growing demand from other competing markets such as fuels and food, and this could restrict the availability of soy oil for producing wax. 

wax industry acclimate to the new sustainable and circular environment

Sustainability trends will provide a new spin to the wax market 

The ever-complex wax market will face new challenges as consumers increasingly demand materials produced from greener sources. As a result of such demand, suppliers will strive to exhibit their commitment to protecting the global ecosystem by including new, innovative products based on renewable and recycled sources. With a reinforced global wave toward sustainability and a circular economy in 2020 and 2021, the wax industry is at the cusp of a new — and sustainable — normal.  

Kline & Company, an industry leader in providing market research reports and expertise on the wax industry, will soon be publishing a detailed report titled, Global Wax Industry: Market Analysis and Opportunities. 

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Global White Oils: Market Analysis and Opportunities

The global demand for white oils has been increasing slowly over the past few years. Despite the slow growth, the market remains dynamic due to the increasing use of Group II baseoils, intensifying competition from small suppliers, substitution by other products, and increasing regulatory control.

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Global Lubricants: Market Analysis and Assessment

This continuous publication since 2003, provides a comprehensive, in-depth analysis of automotive and industrial finished lubricant products, end-use industries, trade classes, major suppliers, and market trends in leading country markets and regions.

The customized report covers your choice of 10 country market and/or supplier profiles and offers a comprehensive Year in Review summarizing the overall global lubricants industry.

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Five Reasons to be a Part of Argentina’s Lubricants Market

Five Reasons to be a Part of Argentina’s Lubricants Market

Argentina lubricant demand growth

The finished lubricants market in Argentina is estimated to increase at a compound annual growth rate (CAGR) of 2.9% between 2020 and 2025 to reach 209.4 kilotonnes, according to Kline’s just-published analysis. What are the five key drivers of this impressive outlook? Where do the opportunities lie? Read on:  

 1. Growth of demand for finished lubricants in Argentina due to growth of e-commerce and delivery apps

Despite the pandemic, the motorcycle parc in Argentina grew by 3% in 2020. The growth in sales stems from the increased demand from e-commerce, delivery apps, and individual transportation. During the same year, 1.3 million new consumers in the country shopped via e-commerce, taking the overall user base to 20 million online shoppers. This generated delivery demand in Argentina for 164 million purchase orders for goods, an increase of 84% over 2019. According to the Global Ecommerce Update 2021, Argentina was the country where e-commerce grew the most in 2020. [1] In addition, according to consultant Focus Marketing, the use of delivery apps in the country grew by 400% from March to May 2020 due to isolation measures [2]. Finally, motorcycles were adopted by Argentines as an economic means of transportation during the pandemic. Without access to public transportation, the alternative of using a personal vehicle for a large part of the population was too expensive, as fuel prices increased 19% in the second half of the year, in addition to inflation of 36% in all other vehicle-associated expenses. 

Why is this an opportunity? Prior to the 2020 pandemic, e-commerce was used by less than 30% of the population in Argentina, and delivery apps were in their infancy. The lockdown drove the need for consumers to make purchases via e-commerce to obtain essential provisions. The adoption of e-commerce and delivery apps by consumers has consolidated even after the lifting of restrictions. Between 2021 and 2025, continued inflation and lack of access to public transportation will push more consumers in the country to purchase motorcycles and scooters as a low-cost solution for delivering e-commerce orders (as part of their jobs) or to move around the cities. These factors will drive demand for MCO in Argentina at a CAGR of 4.0% through 2025, by when re-pandemic activity will return due to extensive levels of vaccination. 


Argentina Lubricant demand growth

2. Argentina’s lithium deposits

As the world turns to hybrid electric vehicles (HEV) and battery electric vehicles (BEV) to reduce CO2 emissions, Argentina has taken steps to profit from its rich lithium deposits. In August 2020, the Sustainable Mobility Law (MS) was introduced; it will facilitate an investment of USD 5 billion in the country for national production (offering tax incentives and accelerated amortization, among others, to manufacturers) to be scaled over the next 20 years. Numerous other themes are also included in the law, such as the Mobility Institute for motivating technological innovation in the vehicle industry, electro-chemical R&D (lithium), mobility R&D, and technology R&D (combustion cells, driverless vehicles, artificial intelligence, and 5G super connectivity). The law covers passenger vehicles, public transportation, and commercial vehicles. Over the next five years, the project plans to attract USD 300 million in investment, generate more than 2,000 jobs, and lead to local and international sales of USD 570 million annually.

While most lithium extraction projects in the country are in their initial phase, the Argentinian government is betting on this sector as a significant source of revenue in the coming years. President Alberto Fernández’s administration hopes to boost annual lithium carbonate production in Argentina to more than 230,000 tons by the end of 2022, a sharp rise from the current level of 40,000 tons. One of the incentives being analyzed to lure miners includes investment incentives for lithium mining, which may include a possible exemption for profit repatriation.

Why is this an opportunity? Argentina is a major source of lithium, the key component in EV batteries. According to the United States Geological Service (USGS) [3], the country has 19.3 million tons of lithium reserves. It has two projects (one on standby) that could generate 38,000 tons of lithium carbonate equivalent (LCE) intended for export. The Argentine Association of Mining Companies (CAEM) [4] expects lithium production in the country to double by 2022. As each of these projects comes to fruition, they will demand a variety of automotive and industrial lubricants for their operation.

3. High commodity prices benefitting sales of agricultural equipment in Argentina

The off-highway finished lubricants segment in Argentina includes vehicles and mobile equipment used in the agriculture, oil and gas, mining, and construction industries. The agricultural and manufacturing industries (mainly associated with food processing) were the largest consumers of industrial lubricants in the country in 2020, accounting for 18% and 17% of demand, respectively.

INDEC (Argentine Institute of Data and Census) reports that in 2020, sales of agriculture equipment units exceeded 2019 levels by 31.2%. Sales of sowing machines grew by 24.9%; tractor sales increased by 4.3%, while only harvesters suffered a minor decline of 2.1%. In 2020, the national production of tractors in Argentina posted growth of 82%. This equipment category is registering impressive growth after two prior years of recession and inflation. Many agricultural companies trade their grains with manufacturers to upgrade their equipment. It is also a way to protect their crops, which lose quality if stored too long in silo bags.

AW68 is the leading hydraulic fluid grade used specifically for its large load-carrying ability, reflecting the demand associated with heavy-duty equipment, including excavators, forklifts, cranes, combines, balers, and harvesters, as well as natural gas and air compressors.

Why is this an opportunity? In the off-highway segment, Argentina’s agriculture industry is implementing high-technology engines, especially in tractors and harvesters. These diesel engines require high-quality HDMO meeting the API CJ-4 and CK-4 service categories, both of which are compatible with Euro V standards. Owners and operators of new equipment typically follow OEM recommendations, which will drive demand for commercial automotive lubricants.

4. Chinese investment in Argentine infrastructure

China is expected to play a key role in the economic recovery of Argentina between 2020 and 2025 as President Fernández gravitates toward the Asian giant to negotiate the entry of the country in the belt and road initiative. Fernández proposed investment projects valued at over USD 30 billion in a May 5, 2021 visit to Beijing, covering sectors ranging from mining and energy to construction and agriculture.

The plan considers more than 20 projects related to energy and infrastructure which include renovation of the infrastructure of the four train lines (one specifically to transport soy from the interior to the port of Buenos Aires), the installation of intelligent pig farms, and the construction of the Nuclear IV power plant. Finally, China will invest in the mining of copper and lithium. [5]

Why is this an opportunity? Proposed Chinese investment in Argentina from 2020 to 2025 will generate more than 20,000 new jobs and require the purchase or importation of equipment specific to each industry, driving demand for automotive and industrial finished lubricants across many industry sectors.

5. Private-sector construction on the rise in Argentina

In 2020, construction represented 5% of off-road lubrication use in an industry that collapsed by 22.8% due to pandemic-related shutdowns.
Manpower Group Argentina conducted its Employment Expectation Survey (ENE) in December 2020 to gauge the outlook in Argentina for 2021. It projects the biggest growth for Argentina’s construction industry, which is expected to expand by over 10%. The 2021 rebound in the Argentine construction sector is driven by factors such as investments in public works by the government, along with tax benefits implemented to push housing construction and pandemic-related lifestyle changes that have forced people to stay at home longer and invest in works and improvements. By April 2021, Argentina’s construction industry had grown by 71% compared to 2019, with most contracted works carrying out operations as “business as usual,” with only 9% of firms still unable to perform due to COVID-19 restrictions. [6]

Why is this an opportunity? Private construction projects in residential units and logistics parks — including demand for warehousing locations to accommodate the growth of e-commerce — will sharply drive demand for commercial automotive lubricants in Argentina during the second half of 2021.

LATAM Finished Lubricants Market Overview

Beyond Argentina’s lubricants demand growth, Latin America’s finished lubricants market also offers opportunities for global and local companies looking to adjust strategic plans for the region. LATAM’s lubricants demand is rebounding, despite COVID-19 continuing to plague the region, as governments ease restrictions to recover economic activity. For example, better-than-expected passenger vehicle sales in key markets such as Mexico, Brazil, and Colombia offer a glimpse of hope. New passenger vehicle sales in Mexico recorded a first-quarter net growth of 3.3% in 2021. [7] In Brazil, accumulated sales of new passenger vehicles are up 32% compared to the prior year, [8] with sales of BEVs/HEVs//PHEVs registering the strongest quarter in history, up 29.4% in contrast to the same period in 2020. [9] Colombia also witnessed extraordinary new passenger vehicle sales, up 86.6% versus March 2020, while year-to-date sales of BEVs/HEVs/PHEVs increased 248.7% for a total of 3,651 units [10].

The mining sector in Latin America also brings good news to lubricants suppliers, as operations fire on all cylinders with silver, gold, copper and even zinc at high values. These metals represent Mexico’s, Chile’s, and Peru’s leading mining operations, and the jump in values supports Kline’s view of a projected 35% growth in Latin American mining in 2021. However, this trend may put the industry on the governments’ radar for increased taxation.

Why is this important? Heavy visgrades (25Ws, 20Ws, and 15Ws) account for 63% of PCMO in LATAM due to the average age of the vehicle parc. However, with the influx of newer vehicles, the trend will continue to move to lower viscosities (5Ws and 0Ws) fueled by the modernization of the parc, the growth of EVs, and OEM recommendations.

Although new tax impositions are more difficult to execute since most agreements between mining companies and governments are protected by international arbitration, elections in Chile, Colombia, and even Ecuador may put the mining industry under tax pressure, depending on their outcome. [11]

Click here to find out more about our upcoming report on Latin America’s Finished Lubricant Market Overview, which offers detailed data on the potential opportunities in sectors in a wide range of countries.
If you are interested in gaining knowledge of Argentina’s lubricants market beyond the five opportunities outlined in this post, CLICK HERE.

Argentina is also a part of Kline’s Global Lubricants Market Study, where its market can be included in the customized report which covers your choice of 10 country markets and/or supplier profiles and offers a comprehensive Year in Review summarizing the overall global lubricants industry. MAKE SELECTION NOW.


  1. Argentine Chamber of E-commerce (CACE),
  2. Focus Marketing
  5. Telam
  11. AMI

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Global Lubricants: Market Analysis and Assessment

This continuous publication since 2003, provides a comprehensive, in-depth analysis of automotive and industrial finished lubricant products, end-use industries, trade classes, major suppliers, and market trends in leading country markets and regions.

The customized report covers your choice of 10 country market and/or supplier profiles and offers a comprehensive Year in Review summarizing the overall global lubricants industry.

Learn More >>

Opportunities in Lubricants: Latin America and Caribbean Market Analysis

This market study assists senior executives, product and market managers, strategic planners, raw material suppliers, and lubricant distributors assess the market for their products and understand their competition in the leading country markets in this region.

Learn More >>



LATAM opportunities in lubricants

The summary of key findings from Kline's previous edition. Overview of Latin American and Caribbean lubricant market. Insights into leading lubricants supplier market shares. Lubricant performance trends and demand growth.



Base oil, base oil everywhere, nor any drop to buy

Base oil, base oil everywhere, nor any drop to buy

*With apologies to Samuel Taylor Coleridge, and his epic poem “The Rime of the Ancient Mariner”

base oils supply demand outlookSince the onset of coronavirus in early 2020, the base oil business has been thrown into disarray. While crude oil prices have increased modestly, with Brent around $55/Bbl in February 2020 and now in the low $60 range, base oil prices have mushroomed. In February 2020, European Group I export spot prices were in the low-mid $600/ton range between SN150 and brightstock. Today, solvent neutral cash market prices are double, and brightstocks almost triple, their levels of just a year ago. The causes of such an explosion in base oil prices are not obvious and go beyond the confines of the base oil business itself. This paper is an attempt to rationalize the complexities.

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In Conversation with a Base Oils Market Authority, Ian Moncrieff

base oils market changesJoin us for a live session with Kline’s VP of Energy, Ian Moncrieff, who explores lubricant suppliers’ questions related to current challenges in the base oils market.  Annie Jarquin, Director, at Kline’s Energy Management Consulting will select the most pressing and interesting questions asked during the webinar and, in a Q&A platform, discuss them with Ian.