• 03 March 2025

New Additive Suppliers Their Niches

Growth in developing markets and supply chain disruptions are two trends in the automotive lubricants markets that have led to massive volume growth of lubricants that claim to “meet the requirements” of industry standards and with them, the emergence of a new generation of additives suppliers. Trevor Gauntlett investigates

API, ILSAC, ACEA, OEM

For many years, the automotive lubricants market has been dominated by fluids that are rigorously tested in many different engine and laboratory tests and meet specific chemical and physical characteristics. The granddaddy of them all is the American Petroleum Institute (API) with its Engine Oil Categories. In the 1990s, the International Lubricants Standardization and Approval Committee (ILSAC) introduced its oil specifications—ILSAC being an alliance of many API members and the Japan Automotive Manufacturer’s Association. Shortly afterward, the European Automobile Manufacturers’ Association (ACEA) introduced its Sequences. As each organization introduced new standards to meet the needs of its OEM members, this led to a divergence in the types of lubricants being used in different markets. “In North America, the market tended to upgrade to the latest API and ILSAC categories at the same time, with a rush to meet the ‘first licensing’ date,” Mike McCabe of Nottingham, England-based MDM Insight told Lubes’n’Greases. “Due to the fuel economy improvement requirements, only certain viscosity grades were permitted to claim ILSAC; however, each new API category was designed to enable a wide range of viscosity grades to be formulated. This allowed marketers to shift their entire product line to the latest category, withdrawing from sale oils that met the old categories almost as soon as the new categories were licensed. The major players looking to differentiate their products usually built additional consumer claims on top of the industry standards, often adding additional chemistry and creating their own unique formulations and performance data.” The European market was moving in a different direction. For example, formulating to protect advanced aftertreatment systems resulted in low-SAPS (sulphated ash, phosphorus and sulfur) formulations, a significant difference from the formulating style for API.

Costs and Compatibility

The costs of complying with divergent requirements meant that almost all lubricants marketers outsourced significant formulating activities to the so-called “Big Four” additives suppliers—Afton Chemical, Chevron Oronite, Infineum and Lubrizol. With the big four owning significant elements of the intellectual property, they also strengthened their upstream connections to most of the supply chain, while the lubricants blenders bought fewer individual components. Lubricants chemistry also began to change, with new types of dispersants, viscosity modifier and antiwear additives being designed to meet increasing demands at the cutting edge. Those companies with test data and predictive computer models for creating new formulations also used them to create packages to meet older claims. But heated arguments raged in behind-the-scenes technical meetings about the correct treat rate for a package. For example, if a low-treat, “modern” formulation could exceed the antiwear performance of an original package in a prediction or benchtop test, did it matter that the phosphorus content was lower than the minimum for the old API Category? No matter which way that debate went, the owners of older vehicles felt they were being overcharged for—or under-protected by—a lubricant that claimed to meet the requirements of their vehicle’s manual. Then and now, the price of the lubricant and trust in a brand (often because of a recommendation from a family member or friend) are key criteria. If that brand claims to “meet the requirements” of the API Category or ACEA sequence relevant to them, the user has no interest in whether a data pack exists showing passing performance in a series of engine tests.

Reimagining the Supply Chain

As the developing markets grew, the big four established and expanded their facilities in the Middle East, Singapore and China to enable more local supply. New manufacturing plants were cheaper to operate, locally sourced raw materials were cheaper to transport, and transport costs to the customer were less due to shorter distances. Of course, local blenders also gained access to additive packages from these facilities. The eastward move was given impetus by hurricanes Katrina and Rita, which hit the United States Gulf Coast within four weeks in 2005. For months, almost everyone was on allocation from somewhere up their supply chain. This shock to the system prompted some of the lubricants blenders to seriously consider the resilience of their supply chains and the sustainability of their formulating philosophy. However, at this point, there were few other places to go, and those lubricants blenders that had outsourced their formulating activities felt very vulnerable. The additives suppliers’ response included diversifying their supply chains, mainly for the longer-established components, helped by developments in China

China Pivots

The Twelfth Five-Year Plan of China, published in 2011, brought a focus on the development of New Energy (electric) Vehicles for passenger cars and a refocus on the heavy-duty market. McCabe, who was based in Beijing at the time, recalls that in 2011 he “was hearing that domestic formulations for basic quality heavy-duty engine oils were available, and local component manufacturers were starting to develop packages based on these.” The plan also called for investment in large-scale petrochemical complexes capable of producing high-quality, high-value products. These raw materials and components, coupled with domestic demand, provided platforms from which companies such as Xinxiang Richful Lubricants (Richful) and Jinzhou Kangtai (Kangtai, now a subsidiary of Rianlon) grew significantly.
Enter the New Players
The availability of components from China, and to a lesser extent India, was then the springboard for a series of additives package companies to emerge in the Middle East. One of these was Kemipex, a supplier of chemical raw materials based in Dubai. “In 2010, we launched several viscosity index improvers under the LUBIMAX brand in the Middle East and Africa, having no thoughts of blending additive packages,” Daryoush Aryaee, executive chairman at Vestcorp Holdings Ltd., the parent you company of Kemipex, told Lubes’n’Greases. “Once we established a reputation for reliability and quality, customers began asking about additives and packages. First, we sourced from Singapore, India and China, buying against chemical and physical specifications from companies with good reputations and rebranding into the LUBIMAX name.” Finding a reliable supplier is key, as some package suppliers do little more than source components that match generic descriptions and formulate to a chemical specification. With customers asking for packages meeting the requirements of more recent performance standards, Kemipex sought to know more about their components, asking questions about the alcohols and sulfur/phosphorus ratios of the ZDDPs, the molecular weight of the dispersant used or the detergent type(s) in the package. A discussion about formulating with a major western chemicals company whose products Kemipex distributed led to a recommendation of a possible partner in Eastern Europe with a track record of formulating for western categories and sequences since the Iron Curtain fell. “The partnership helped to raise the expertise of our technical staff, particularly the competence to formulate,” Aryaee said. But the door didn’t open to the major players, who still wanted a full suite of engine testing data before they would consider a package.

Crises and Opportunities

In quick succession came the 2019 fire at Lubrizol’s Rouen plant, COVID-19 and associated lockdowns, the Suez Canal blockage by the Ever Given, and the sanctions and supply outages that resulted from the Russian invasion of Ukraine. For those in the grease sector, there was also the fire that destroyed Chemtool’s plant in Rockton, Illinois, which was one of the largest in the U.S. The Rouen fire affected Lubrizol’s capability to supply many additives and packages, leaving gaps in supply that agile competitors were willing to fill. Those companies were just beginning to build inventory four months later when the COVID lockdowns began. “LUBIMAX products were readily available throughout the Middle East and Asia, but COVID changed the game. We had enquiries from almost every market in the world,” Aryaee said. Good fortune allowed Kemipex to seize many of those opportunities. “As we already had Microsoft Teams in place, we gained a significant advantage over many competitors in the early weeks of the global lockdowns because we were easily accessible, and internal communications between our group of companies in various countries were seamless,” Aryaee added. It was also the point at which one of the top ten lubricants marketers approached Kemipex to ask for product, saying that they had already tested some LUBIMAX products inhouse and approved them for several markets where full licensing was not possible. On allocation from their main supplier, they now needed the LUBIMAX package. It wasn’t all plain sailing, though. Lockdowns in China shut off many individual components to all customers, leading to scrambles for alternatives and attempts to at least demonstrate no harm. Every company needed their partners and—if they could live at the pace—the small, agile companies that were usually upstream earned the trust of the larger partners.

Finding Formulators

One way that many of the newly emerging additives package suppliers are progressing is by hiring experienced formulators with a track record with oil companies or the big four additives suppliers. These formulators have the knowledge to identify appropriate components, then produce packages capable of meeting the most recently displaced API specification. This generates credibility with potential customers, who had previously been reluctant to engage, and raises the competence of the staff at the newer companies through training and mentoring. While the desired next step is usually for the additive supplier to generate engine test data to support the performance claims, some downstream customers have been willing to share costs to conduct what they regard as the critical tests to “meet the requirements.” This was the case for Bahrain Petroleum Company (BAPCO), a producer of Group III base oils, which found a company as a formulating partner. As BAPCO exited its joint venture with Neste, it acquired full control of the base oils slate, but with limited data and approvals in relevant lubricants formulations that it was free to share. “After much groundwork, BAPCO found a valued and capable partner that agreed to expand the test matrix on formulations with BAPBase(R) base oils in many of the significant engine tests for the latest API Categories and some OEM tests,” Norman Sheppard, an independent consultant who was working for BAPCO at the time, told Lubes’n’Greases. The two companies then shared all intellectual property that was generated. “This provided the foundation on which value added BAPbase (R) was able to enter International markets.”

War and Sanctions

More recently, the war in Ukraine has changed the market for many players. In seeking to avoid U.S. sanctions, western suppliers have withdrawn from many markets. Russian and Ukrainian suppliers that had significant export business to neighboring countries have focused their efforts on supporting their military and have lost access to some key raw materials. All of this has allowed other players to gain significant market share.

Heading into the Future

Both Richful and Kangtai announced significant investment in capacity expansion in September 2024 and have been promoting themselves at western lubricants meetings. Kemipex is now working with some of the biggest players in the market on appropriate testing. “We are now moving from side-by-side comparisons with product from competitors in bench tests, toward testing programs in industry standard tests,” Aryaee said. So, in an interesting example of circularity, LUBIMAX packages are now in the process of being tested in engines to demonstrate that they meet the requirements.

Author: Trevor Gauntlett