NewMarket Corporation (NewMarket), through its subsidiaries, engages in the petroleum additives business.
The company is a holding company and is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), American Pacific Corporation (AMPAC), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). The company acquired AMPAC on January 16, 2024.
Afton manufactures and sells petroleum additives, while Ethyl mar...
NewMarket Corporation (NewMarket), through its subsidiaries, engages in the petroleum additives business.
The company is a holding company and is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), American Pacific Corporation (AMPAC), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). The company acquired AMPAC on January 16, 2024.
Afton manufactures and sells petroleum additives, while Ethyl markets antiknock compounds in North America and performs contracted manufacturing and related services. AMPAC is a manufacturer of specialty materials primarily used in solid rocket motors for the aerospace and defense industries. NewMarket Development manages the real property that the company owns in Virginia. NewMarket Services provides various administrative services to NewMarket, Afton, Ethyl, AMPAC, and NewMarket Development. NewMarket Services expenses are billed to each subsidiary pursuant to services agreements between the companies.
As a specialty chemicals company, Afton develops and manufactures highly formulated lubricant and fuel additive packages and markets and sells these products worldwide. Afton is one of the largest lubricant and fuel additives companies in the world. Lubricant and fuel additives are necessary products for efficient and reliable operation of vehicles and machinery. From custom-formulated additive packages to market-general additives, Afton provides customers with products and solutions that make engines run smoother, machines last longer, and fuels burn cleaner.
Afton has operations in North America, Europe, Asia, Africa, and South America. Afton is dedicated to developing additive formulations that are tailored to the company’s customers’ and the end-users’ specific needs. Afton’s portfolio of technologically advanced, value-added products allows it to provide a full range of products, services, and solutions to its customers.
Ethyl provides contracted manufacturing and related services to Afton and to third parties and is a marketer of antiknock compounds in North America.
AMPAC has operations in the United States and manufactures and sells specialty materials used in solid rocket motors for space launch and military defense applications. AMPAC has long-term relationships with customers and the ability to formulate products to meet the various specification requirements of its customers, resulting in AMPAC being a global leader in specialty materials for use in solid rocket motors.
NewMarket Development manages the real property the company owns in Richmond, Virginia consisting of approximately 50 acres.
Business Segments
The company operates through two segments, Petroleum Additives, which is primarily represented by Afton; and Specialty Materials, which is represented by AMPAC. The antiknock compounds business of Ethyl is reflected in the ‘All other’ category.
Petroleum Additives - Petroleum additives are used in lubricating oils and fuels to enhance their performance in machinery, vehicles, and other equipment. The company manufactures chemical components that are selected to perform one or more specific functions and combine those chemicals with other chemicals or components to form additive packages for use in specified end-user applications. The petroleum additives market is a global marketplace, with customers ranging from large, integrated oil companies to national, regional, and independent companies.
The company invests significantly in research and development in order to meet its customers’ needs and to adapt to the rapidly changing environment for new and improved products and services.
The company views the petroleum additives marketplace as being consisted of two broad product applications: lubricant additives and fuel additives. Lubricant additives are highly formulated chemical solutions that, when blended with base fluids, improve the efficiency, durability, performance, and functionality of mineral oils, synthetic oils, and biodegradable fluids, thereby enhancing the performance of machinery and engines. Fuel additives are chemical components that help oil refiners meet fuel specifications or formulated packages that improve the performance of gasoline, diesel, biofuels, and other fuels, resulting in lower operating costs, improved vehicle performance, and reduced emissions.
Lubricant Additives
Lubricant additives are essential ingredients for making lubricating oils. Lubricant additives are used in a wide variety of vehicle and industrial applications, including engine oils, transmission fluids, off-road powertrain and hydraulic systems, gear oils, hydraulic oils, and turbine oils, and virtually any other application where metal-to-metal moving parts are utilized. Lubricant additives are organic and synthetic chemical components that enhance wear protection, prevent deposits, and protect against the hostile operating environment of an engine, transmission, axle, hydraulic pump, or industrial machine.
Lubricants are widely used in operating machinery from transportation vehicles to heavy industrial equipment. Lubricants provide a layer of protection between moving mechanical parts. Without this layer of protection, the normal functioning of machinery would not occur. Effective lubricants reduce downtime and increase efficiency. Specifically, lubricants serve the following main functions:
friction reduction—Friction is reduced by maintaining a thin film of lubricant between moving surfaces, preventing them from coming into direct contact with one another and reducing wear on moving machinery, thereby providing longer life and operational efficiency.
heat removal—Lubricants act as coolants by removing heat resulting either from friction or through contact with other, higher temperature materials.
containment of contaminants—Lubricants function by carrying contaminants away from the machinery and neutralizing the harmful impact of the by-products created by combustion.
The company offers a full line of lubricant additive packages, each of which consists of component chemicals specially selected to perform desired functions. The company manufactures most of the chemical components and blend these components to create formulated additive packages designed to meet industry and customer specifications. Lubricant additive components are generally classified based upon their intended functionality, including:
Detergents, which clean moving parts of engines and machines, suspend oil contaminants and combustion by-products, and absorb acidic combustion products;
Dispersants, which serve to inhibit the formation of sludge and particulates;
Extreme pressure/antiwear agents, which reduce wear on moving engine and machinery parts;
Viscosity index modifiers, which improve the viscosity and temperature characteristics of lubricants and help the lubricant flow evenly to all parts of an engine or machine; and
Antioxidants, which prevent oil from degrading over time.
The company is one of the leading global suppliers of specially formulated lubricant additives that combine some or all of the components described above to develop its products. The company’s products are highly formulated, complex chemical compositions derived from extensive research and testing to ensure all additive components work together to provide the intended results. The company’s products are engineered to meet specifications prescribed by either the industry or a specific customer. Purchasers of lubricant additives tend to be integrated oil companies or independent compounders/blenders. The company makes no sales directly to end-users or to original equipment manufacturers (OEMs).
The company views its participation in the lubricant marketplace in three primary areas: engine oil additives, driveline additives, and industrial additives.
Engine Oil Additives - The largest submarket within the lubricant additives marketplace is engine oil additives which consists of additives designed for passenger cars, motorcycles, on and off-road heavy duty commercial equipment, locomotives, and large engines in ocean-going vessels. The company estimates engine oil additives represent approximately 70% of the overall lubricant additives market volume.
The engine oil market’s primary customers include consumers, fleet owners, mining and construction companies, farmers, railroads, shipping companies, service dealers, and OEMs. The primary functions of engine oil additives are to reduce friction, prevent wear, control formation of sludge and oxidation, and prevent rust. Engine oil additives are typically sold to lubricant manufacturers who combine them with a base oil fluid to meet internal, industry, and OEM specifications.
Key drivers of engine oil additives demand are the number of vehicles on the road, total vehicle miles driven, fuel economy, the average age of vehicles on the road, drain intervals, engine and crankcase size, changes in engine design, and temperature and specification changes driven by OEMs. The extension of drain intervals has generally offset increased demand due to higher vehicle population, new hardware, and more miles driven. Other key drivers include industrial production rates, agricultural output, mining and construction output, environmental regulations, and infrastructure investments of commercial companies. Afton offers products that enhance the performance of mineral, part-synthetic, and fully synthetic engine oils.
Driveline Additives - The driveline additives submarket is consisted of additives designed for products, such as transmission fluids, axle fluids, and off-road powertrain fluids. This submarket shares in the 30% of the market not covered by engine oil additives. Transmission fluids primarily serve as the power transmission and heat transfer medium in the area of the transmission where the torque of the drive shaft is transferred to the gears of the vehicle. Axle fluids lubricate gears and bearings in axles, and powertrain fluids are used in off-highway powertrain and hydraulic systems. Other products in this area include power steering fluids, shock absorber fluids, gear oils, and lubricants for heavy machinery. Additionally, as a leading additive supplier to the electric vehicle market, the company is investing in and delivering new technologies to enable electric vehicle market growth to help reduce carbon emissions. The company anticipated and is responding to the need for future lubricants to consider conductivity, the effect of electric fields, low friction/high speed, noise, and battery cooling or copper wire drawing. All driveline additives products must conform to highly prescribed specifications developed by vehicle OEMs for specific models or designs. Driveline additives are generally sold to oil companies for ultimate sale to vehicle OEMs for new vehicles (factory-fill), service dealers for aftermarket servicing (service-fill), retailers, and distributors.
Key drivers of the driveline additives marketplace are the number of vehicles manufactured, total number of vehicles in operation, drain intervals for transmission fluids and axle fluids, changes in engine and transmission design and temperatures, and specification changes driven by OEMs.
Industrial Additives - The industrial additives submarket is consisted of additives designed for products for industrial applications, such as hydraulic fluids, grease, industrial gear fluids, and industrial specialty applications, such as turbine oils. This submarket also shares in the 30% of the market not covered by engine oil additives. These products must conform to industry specifications, OEM requirements, and/or application and operating environment demands. Industrial additives are generally sold to oil companies, service dealers for after-market servicing, and distributors.
Key drivers of the industrial additives marketplace are gross domestic product levels and industrial production.
Fuel Additives: Fuel additives are chemical compounds that are used to improve both the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels. Benefits of fuel additives in the oil refining process include reduced use of crude oil, lower processing costs, and improved fuel storage properties. Fuel performance additives enhance fuel economy, improve ignition and combustion efficiency, reduce emission particulates, maintain engine cleanliness, and protect against deposits in fuel injectors, intake valves, and the combustion chamber. The company’s fuel additives are extensively tested and designed to meet stringent industry, government, OEM, and individual customer requirements.
Many different types of additives are used in fuels. Their use is generally determined by customer, industry, OEM, and government specifications, and often differs from country to country. The types of fuel additives the company offers include:
Gasoline performance additives, which clean and maintain key elements of the fuel delivery systems, including fuel injectors and intake valves, in gasoline engines;
Diesel fuel performance additives, which perform similar cleaning functions in diesel engines;
Cetane improvers, which increase the cetane number (ignition quality) in diesel fuel by reducing the delay between injection and ignition;
Stabilizers, which reduce or eliminate oxidation in fuel;
Corrosion inhibitors, which minimize the corrosive effects of combustion by-products and prevent rust;
Lubricity additives, which restore lubricating properties lost in the refining process;
Cold flow improvers, which improve the pumping and flow of distillate and diesel fuels in cold temperatures; and
Static dissipating additives.
The company offers a broad line of fuel additives worldwide and sell its products to major fuel marketers and refiners, as well as independent terminals and other fuel blenders.
Key drivers in the fuel additive marketplace include total vehicle miles driven, fuel economy, the introduction of new engine designs, regulations on emissions (both gasoline and diesel), quality of the crude oil slate and performance standards, and marketing programs of major oil companies.
Competition
In the lubricant additives submarket, the company’s major competitors are The Lubrizol Corporation (a wholly-owned subsidiary of Berkshire Hathaway Inc.), Infineum (a joint venture between ExxonMobil Chemical and Shell plc), and Chevron Oronite Company LLC.
In the gasoline detergent market, the company competes mainly against BASF, Chevron Oronite Company LLC, Innospec Inc., and The Lubrizol Corporation. In the diesel and refinery markets, the company competes mainly against The Lubrizol Corporation, Infineum, BASF, Clariant Ltd., Dorf Ketal, and Innospec Inc.
Specialty Materials – The company’s specialty materials segment is principally engaged in the production of perchlorates, which include several grades of ammonium perchlorate, sodium perchlorate, and potassium perchlorate.
Ammonium perchlorate is a key component of solid rocket motors, booster motors, and missiles that are utilized in the U.S. Department of Defense (DOD) tactical and strategic missile programs. There is no alternative to the use of these solid rocket motors for national security applications, and due to the critical role of ammonium perchlorate in such motors, the U.S. government views it as a strategic national resource. Ammonium perchlorate is also used in space exploration programs for the National Aeronautics and Space Administration (NASA) and commercial space launch vehicles.
The company supplies ammonium perchlorate for use in a number of defense and space launch programs of the U.S. and the U.S. allies via the U.S. government agencies, government contractors, and foreign contractors. Exporting ammonium perchlorate is subject to federal regulation that permits the company’s foreign sales of ammonium perchlorate. The company obtains export licenses on a case-by-case basis, which are dependent upon the ultimate use of its product.
Customers of ammonium perchlorate primarily consist of rocket motor manufacturers supplying the DOD and NASA programs, as well as entities providing commercial space launch applications and foreign military applications.
Demand for ammonium perchlorate is program-specific and dependent upon, among other things, governmental appropriations. The need for tactical rockets, strategic missiles, and solid rocket boosters is anticipated to provide the base demand over the coming five-year period and beyond.
The company also produces and sells different types and grades of sodium and potassium perchlorates, which have a wide variety of applications, including munitions, explosives, propellants, perchloric acid, initiators, electronics, batteries, plastics, electro-machining, and porcelain.
All Other
The ‘All other’ category includes the operations of the antiknock compounds business (primarily sales of antiknock compounds in North America), as well as certain contracted manufacturing and related services performed by Ethyl. The Ethyl facility is located in Houston, Texas and is substantially dedicated to terminal operations related to antiknock compounds and other fuel additives. The financial results of the petroleum additives activities performed by Ethyl are reflected in the petroleum additives segment results. The ‘All other’ category financial results include a service fee charged by Ethyl for its production services to Afton.
Intellectual Property
The company owns approximately 1,400 issued or pending United States and foreign patents. In addition, the company has acquired the rights under patents and inventions of others through licenses or otherwise. The company has several hundred trademark registrations throughout the world for its marks, including NewMarket, Afton Chemical, Ethyl, AMPAC, HiTEC, Passion for Solutions, Halotron, DriveMore, and Axcel.
Governmental and Environmental Regulations
As a chemical company, the company is subject to regulation by local, state, federal, and foreign governmental authorities specific to the production, distribution, management, and stewardship of chemicals. The company’s specialty materials segment is subject to the International Traffic in Arms Regulations, a set of the U.S. government regulations that controls the export of defense and military technologies, and its international sales require export licenses on a case-by-case basis.
History
NewMarket Corporation was founded in 1887. The company was incorporated in the Commonwealth of Virginia in 2004.
