SINGAPORE—Afton Chemical opened a lubricant additives factory in Singapore last week, joining the ongoing march of lubricant and additive suppliers to Asia and to this island nation in particular.
Like others that have built production facilities in the region, Afton officials said the company felt compelled to establish manufacturing capacity in the area that is the global industry’s growth engine.
Afton Chemical opened a lubricant additive plant on Singapore’s Jurong Island last week.
“We have a strong technical team in the region, and we need a plant here so we can have products made for and in the region,” President Rob Shama said during a reception to commemorate the opening at Singapore’s ArtScience Museum.
This first phase of the plant cost SG $100 million (U.S. $72.3 million) and has capacity to make 25,000 metric tons per year of detergents, which will be blended with other components and base stock diluent to produce lubricant additive packages. Afton has already undertaken an expansion that will bring the total investment to SG $400 million and which is scheduled to be completed next year. The second phase of the project is designed to add units that produce dispersants and zinc dithiophosphate (ZDDP) antiwear agents.
The Singapore plant is Afton’s first greenfield plant construction in 35 years. The products it sells in Asia have been supplied from factories in the United States and Europe. Officials said they are not concerned about a slowdown that has hit the regional industry since construction of the plant began.
“This industry has always had its ups and downs,” Thomas E. (Teddy) Gottwald, Chairman and CEO of parent company NewMarket Corp., told a reporter. “But the additive market is still growing 1 to 2 percent per year. [Afton’s manufacturing facilities] have been running flat out for a while, so to meet our goals we needed more capacity.
“Sure it would be nice if China was growing 10 percent per year, but our investments in this region are not made for a quick return.”
The global lubricants industry shifted toward Asia over the past decade, as the region’s developing economies spurred steady demand growth while markets in North America and Europe plateaued or shrank.
Analysts estimate that the Asia-Pacific region’s share of global demand is approaching 45 percent. Outside lubricant and additive suppliers have made numerous investments in manufacturing sites in the region, generally citing the same reasons as Afton: facilities in the immediate area offer quicker and more reliable deliveries than sources in other parts of the world; and supplier operations in the region can focus better on the particular needs of customers there.
In a press release, Afton said its “Made for Asia” strategy “ensures that the products and services it offers are developed on the basis of regional insights.”
Singapore has been a focal point for industry investment and now arguably has the world’s greatest concentration of lubricant and lube additive production. Two of Afton’s main competitors, Chevron Oronite and Infineum, recently expanded (or opened) additive plants here. The small island nation now hosts production facilities operated by three of the world’s main lube additive suppliers. The fourth, Lubrizol, has a regional headquarters on the island but has put its manufacturing investments in the region in China.
Singapore Minister for Trade and Industry S. Iswaran attended the reception and said the country offers a number of advantages attractive to lube additive suppliers: strong protection for intellectual property; proximity to numerous lubricant blenders, along with three base oil refineries; stable government; and well-developed infrastructure.
Iswaran added that Asia is poised for continued growth in lube additive demand and he and other officials noted that Singapore has specifically targeted that industry as one that it wants to foster.
“We believe there is opportunity for more investment here by this industry,” said Damian Chan, executive director for energy and chemicals with the Singapore Economic Development Board.