The formal COVID-19 National Emergency is set to end in the United States on May 11, 2023, but is everything back to normal? Let’s not try to answer that question and rather narrow the scope to the grease industry.
- Is everything back to normal in the grease industry?
- Have grease and oil pricing stabilized?
- Are grease and oil shortages in the past?
- Has innovation taken second place to fortifying supply lines?
Answering these 4 questions will shed some light on where the grease and oil industry is headed and what hurdles, if any, still remain.
Is everything back to normal in the grease industry?
No, the grease industry was hit very hard during COVID and many of the headaches still remain. Perhaps, the biggest hit to the grease industry is the increased cost of Lithium.
Lithium and its variations are the #1 thickener used in the grease industry. Just a quick glance at the above chart will show the shock that electric vehicles and lithium demand had on lithium prices and in turn the grease industry.
It’s a 700% cost increase, which is a huge problem, however, along with the price increase came shortages which pushed prices even higher. This situation left grease companies with two options:
- Stick with lithium, raise prices and work through shortages.
- Change to non-lithium greases but bear the costs of a product change.
Many large companies moved forward with lithium greases as the cost of a product change was too great, however, some companies like AET Systems, Inc. chose to move forward with calcium greases. Calcium, as a grease thickener, out performs lithium but was always more expensive until recently.
In the end companies that switched to calcium became the winners as they had superior products, lower pricing, and a stable supply (lithium shortages continue to plague the grease industry).
Have grease prices finally stabilized?
Yes, for the moment grease prices are stable, however, they are still considered to be high, just as many product in the general market.
The main raw materials holding grease prices up are additives and thickeners, and at this time it doesn’t seem prices will normalize back at pre-pandemic prices. So, while high prices have stabilized, they are here to stay.
Are grease shortages in the past?
The answer to this question is yes and no. While grease seems to be catching up on the supply side, standard grease cartridges continue to in very short supply and are not recovering. Many grease companies were forced to sell bulk grease to customers and force them to refill or reload tubes or grease guns, but this caused many customers to look for new options.
While standard grease tubes continue to be in short supply a great alternative became vastly popular. Lube-Shuttle® grease cartridges, which had a strong supply, saw a huge demand boom. In some ways the grease industry benefited from the standard grease tube shortage as the new Lube-Shuttle® cartridge is far superior to the standard tube.
Empty Lube-Shuttle® Cartridges 10 tubes
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Lube-Shuttle® cartridges are sealed, similarly to a caulk tube, and do not leak, eliminate air gap issues, and are reusable and recyclable. Over 400 OEMs and lubricant manufacturers now supply grease in Lube-Shuttle® cartridges, making it the new standard in grease delivery.
Companies hit hardest by the grease tube shortages continue to be Shell™ and Mobil™ both of which continue to move bulk grease to customers seeking grease in tubes. Un-affected by the tube shortage continue to be companies like AET Systems, Inc., Wagner, and AirTec all of which were early adapters to the Lube-Shuttle® system and have converted nearly all their grease lines to this cartridge.
Another shortage plaguing the grease industry is the shortage of polyurea thickeners. Polyurea is used extensively for thickening long life greases, rated for life greases, and electric motor bearing grease. Shortages and the specialty of polyurea grease have led many manufacturers to drop their polyurea grease products or have them very limited stocks.
AirTec’s P100 polyurea grease is one of the few polyurea greases that continues to be widely available, this is possibly due to it being unaffected by the tube shortage in addition to the polyurea shortage.
Has innovation taken second place to fortifying supply lines?
Yes, in some cases. Many lubricant companies are focused on shoring up supply lines while preparing for an economic downturn. This pulls money out of research and development and into production and inventory.
So, naturally some innovation has lost some priority, but other innovations such as Lube-Shuttle® have flooded the market as they fill gaps left by older and unavailable products/technology.
In the long term shortages and price increases tend to push innovation into the market, so in the long run it is expected that innovation will win out the market and come back stronger than before.
Just as every industry there have been winners and losers in the grease world. Companies that are winning seem to be ahead of the curve with new products and have shifted from data technologies that became hard to source.
The winners: Businesses that switched to calcium greases and new grease delivery systems have strong demand for well supplied products while offering competitive prices.
The losers: Oil companies that stayed committed to old products that slowly lost their competitive price advantage and were plagued with supply issues (and continue to be plagued with supply issues). The next 3 years will tell the tale of the grease and oil industry as petroleum in general faces more challenges. Will innovation continue to win? At AET Systems, Inc. we are betting on it!