Refrigeration Lubricants Market Size Forecast to Reach $1.9 Billion by 2026
Refrigeration Lubricants Market size is forecast to reach $1.9 billion by 2026, after growing at a CAGR of 5.4% during 2021-2026. Refrigeration lubricants are essential for the performance and longevity of refrigeration systems such as air conditioning, chillers, and coolers. One of the major drivers of the refrigeration lubricants market is the rising demand for consumer appliances such as air conditioners and refrigerators as a result of buying power and increasing urbanization. The growth of the refrigeration lubricants market is also being spurred by increasing global cold supply chain demand as a result of the growing food, beverage, and pharmaceutical industries. Rising demand for high-quality and low-viscosity refrigerant fluids and refrigerant compressor oils will further continue to propel the growth of the refrigeration lubricants industry. However, stringent regulations regarding the limited use of refrigerant fluids such as fluorocarbon refrigerants will hinder the market growth during the forecast period.
COVID-19 Impact
The covid-19 outbreak had a significant effect on the oil and gas industry, which in turn affected the supply of raw materials used to make mineral oil, such as naphthalene and paraffin, and thus on the production of refrigeration lubricants. During the covid-19 outbreak, an increase in the consumption of frozen and processed food items had a positive effect on the growth of the refrigeration lubricants industry. The rising government funding for research activities and clinical trials, combined with the demand for laboratory freezers used in the development of biopharmaceuticals and organ transplant procedures, is expected to fuel the growth of the refrigeration lubricants market in the coming years. The automotive and consumer electronics industries have harmed refrigeration lubricant demand. To stop the spread of COVID-19, automakers around the world are taking drastic steps such as plant closures. Ford, Volkswagen, and Fiat Chrysler Automobiles N.V., for example, are among the world’s largest automakers. The Federal Communications Commission (FCA) shut down the majority of its plants. Furthermore, a drop in consumer electronics sales resulted in a drop in demand for refrigeration lubricants. With the relaxation of lockdown and trade controls, as well as government support, end-use industries’ demand for refrigeration lubricants is likely to grow.
Refrigeration Lubricants Market Segment Analysis – By Base Oil
The synthetic lubricants segment held the largest share in the refrigeration lubricants market in 2020 up to 68%. This dominance is attributed to its high performance in extreme conditions, superior viscosity index, high thermal stability, high shear stability, and enhanced chemical resistance in comparison to mineral oil. Synthetic lubricants also increase the service life of the lubricant (typically four to eight times longer than mineral lubricants) and reduce the lubricant consumption due to its low volatility. Furthermore, it also increases wear protection resulting in less frequent maintenance. Additionally, Synthetic oil lasts longer and is compatible with current refrigerants such as NH3, HFO, and CO2 that have a low GWP. These advantages associated with synthetic lubricants are anticipated to be the major factor driving its demand and growth during the forecast period.
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Refrigeration Lubricants Market Segment Analysis – By Refrigerant Type
The hydrofluorocarbon (HFC) segment held the largest share of more than 35% in the refrigeration lubricants market in 2020. Hydrofluorocarbons (HFCs) have many good refrigerant properties such as are safe, dependable, effective, accessible, and affordable, and also meet the industrial standards. They are non-ozone depleting, so there is no phase-out due to ozone depletion that is driving the market growth. HFCs are incredibly potent greenhouse gases and their global warming potential (GWP) is thousands of times that of carbon dioxide, owing to which demand for its alternative is increasing. Since, ammonia is impurity-free, environmentally friendly, reliable, and cost-effective option in the market, it is replacing hydrofluorocarbon (HFC) in most of the applications.
Refrigeration Lubricants Market Segment Analysis – By Application
The refrigerators/freezers segment held the largest share of more than 30% in the refrigeration lubricants market in 2020 and is growing at a CAGR of 6.3% during 2021-2026. This increase can be due to rising demand for perishable food items as well as increased food trade. There is an increasing demand for refrigerant fluids and refrigerant compressor oils to store and transport food products. The rising sales of refrigerators & freezers for storage and transportation of food items is also anticipated to drive the growth of refrigeration lubricants market over the forecast period.The air conditioner segment is expected to grow with the highest CAGR of 7.1% during 2021-2026, as its demand is increasing from automobiles, residential houses, and commercial houses. Refrigeration lubricants have multiple purposes in air conditioning such as removing heat, lubricating moving parts, acting as a sealant, cooling the key parts of compressors, and more, owing to which its demand is increasing at a rapid pace for the application of air conditioning during the forecast period.
Refrigeration Lubricants Market Segment Analysis – By End-Use Industry
The building segment held the largest share in the refrigeration lubricants market in 2020 and is growing at a CAGR of 8.6% during 2021-2026, owing to the increasing demand for refrigerant fluids and refrigerant compressor oils from the residential, commercial, and industrial sectors. Refrigeration lubricants provide high oxidation resistance, resistance to thermal degradation, non-foaming, water separation, anti-wear properties, and corrosion resistance properties to refrigerants, owing to which its demand is increasing in the industries. Since some of the main processes are subjected to refrigeration, petroleum refineries which are one of the largest users of refrigeration lubricants. Globally, the increasing consumption of air conditioners for commercial and residential purposes is also estimated to boost the refrigeration lubricants market. The use of refrigerators freezers, chillers, and air conditioners in pharma research labs, food & beverage facilities, and fine chemical industries is also projected to substantially increase with the increasing industrial sector in various regions during the forecast period.
Refrigeration Lubricants Market Segment Analysis – By Geography
Asia-Pacific region held the largest share in the refrigeration lubricants market in 2020 with more than 45% and is expected to grow at a highest CAGR during 2021-2026, owing to the escalating demand for refrigeration lubricants from the food & beverage and Pharma industries. The food & beverage, and pharma industry in Asia-Pacific is growing at the fastest rate, with China, Japan, and India leading the way. The rising demand for refrigeration lubricants from the food and pharmaceutical industries to prolong shelf life would propel the industry further. China’s food and beverage (F&B) market are worth $595 billion in 2019, up 7.8% from the previous year, according to the China Chain Store & Franchise Association. In 2018, Japan’s food processing industry generated $216.8 billion in food and beverage products, up marginally from 2017. According to Invest India, India is a significant and rapidly expanding player in the global pharmaceutical industry. It is the world’s largest supplier of generic drugs, accounting for 20% of global supply by volume, as well as supplying 62 percent of global vaccine demand. With the increasing food & beverage and Pharma industry in Asia-Pacific, the demand for refrigeration is also increasing to store food, beverage, vaccines, and more. And with the increasing demand for refrigeration from these end-uses, the demand for refrigeration lubricants is also substantially rising in Asia-Pacific during the forecast period.
Refrigeration Lubricants Market – Drivers
Increasing Automotive Production
Refrigeration lubricants are extensively utilized in the traditional as well as electric automobiles for the proper functioning of automotive air conditioners. Refrigeration is used to cool the driver’s or passenger’s cabin in motor vehicle air conditioning (MVAC) equipment. The production of the automobile is on an upsurge in various regions. For example, according to OICA, Africa produced 776,967 passenger cars in 2018, which increased to 787,287 in 2019, a 1.3 percent increase. According to the International Energy Agency (IEA), global sales of electric vehicles surpassed 2.1 million in 2019, bringing the total stock to 7.2 million. In 2019, electric vehicles accounted for 2.6 percent of global car sales and about 1% of global car stock, representing a 40 percent rise year over year. Also, governments are launching initiatives to support the growth of the automotive industry. For instance, the Indian government launched Automotive Mission Plan 2016-26 (AMP 2026) to boost the automotive industry in the country. The collective vision of the government on how the automotive sector should grow in terms of size, contribution to national development, technological maturity, global competitiveness, and institutional structure is clearly outlined. Thus, increasing automation production will require more air conditioning systems, which will act as a driver for the refrigeration lubricants market during the forecast period.
Flourishing Food & Beverage Industry
Freezing is the foundation of food preservation and its core technology. Freezing also helps in maintaining the food product’s original color, scent, and taste to the greatest degree. Thus, refrigeration is often used in the industry to preserve and improve the shelf-life of food & beverages. The freezing of bakery products, meat, poultry, fish, prepared meals, vegetables, and fruits are major places where refrigeration is used for the food industry. In 2019, revenues from Russia’s food and drink processing sectors reached $102.4 billion. Food production turnover increased 6.5 percent from 2018, while the beverage sector increased 11.9 percent, according to the International Trade Administration (ITA). The Russian food processing industry is growing, driven by strong government support for domestic agricultural production and by an ambitious national goal of increasing food exports by 70 percent by 2024 (to $45 billion). According to the United States Department of Agriculture (USDA), in 2018, the total value of all retail food and beverage sales in Japan was $479.29 billion (¥53,339 billion), an overall increase of 2.3 percent. The rising disposable income has resulted in the increasing demand for the food and beverage industry in various regions, which is further driving the growth of the refrigerant lubricants market.
Refrigeration Lubricants Market – Challenges
Stringent Rules and Regulations
Refrigeration lubricants are being phased out because of evidence that they damage the ozone layer and lead to global warming. Environmental factors associated with the use of a refrigeration system are expected to pose a significant challenge to the refrigeration lubricant market’s development. India completed the phase-out of hydrochlorofluorocarbon (HCFC)-141 b in January 2020. The management of fluorinated greenhouse gases is being heavily regulated. H-CFCs have been barred from commercialization worldwide since 2015, thanks to the Montreal Protocol and its modifications. According to the 2016 Kigali Amendment to the Montreal Protocol, developed countries must reduce their use of H-FC by 45 percent by 2024 and 85 percent by 2036, relative to 2011-2013 levels, starting in 2019. Beginning in 2024, developing countries will begin to limit and reduce their H-FC intake. As a result, it is expected that HCFC production will end in 2020 (HCFC-22) or 2030. (HCFC-123). This means that, while equipment using these refrigerants will work fine for 20 or 30 years, new or recycled refrigerants to service it may not be accessible. Over the forecast period, stringent rules and regulations on the use of fluorocarbon refrigerants are expected to stifle market development.
Refrigeration Lubricants Market Landscape
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the refrigeration lubricants market. Major players in the refrigeration lubricants market are JXTG Group, BASF SE, Idemitsu Kosan Co., Ltd., Royal Dutch Shell plc, ExxonMobil Corporation, BP p.l.c., PETRONAS, Chevron Corporation, Total S.A., Sinopec Group, FUCHS PETROLUB SE, Johnson Controls, and The Lubrizol Corporation (CPI Fluid Engineering Services).
Acquisitions/Technology Launches
In May 2019, due to the rising global demand for long-life lubricant additives, BASF SE increased its capacity for antioxidants for lubricants in China and Mexico.
Key Takeaways
Asia-Pacific dominates the refrigeration lubricants market. The rising demand for refrigeration lubricants can be attributed to the increasing usage of air conditioning systems for domestic and industrial applications in the region.
According to the UN’s Food and Agriculture Organization (FAO), 40% of food produced in developing countries goes wastage before reaching a market. Thus, there is a growing use of refrigerant fluids and refrigerant compressor oils in transportation applications such as the cold chain, which is expected to provide numerous growth opportunities.
Growing consumption of packaged food products and preservation & utilization of vaccines and drugs will propel the demand for refrigerators, freezers, air conditioners, and automobile HVAC systems, positively impacting the market growth.
Lifestyle changes, especially in developing regions, are driving the demand for food storage equipment and air conditioning.
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