An abradable powder composition is includes a metal component, a lubricant component, and a polymer component. A portion of the metal component is wrapped in the lubricant component to achieve high lubricity and abradability. The abradable powder composition can be used to form an abradable seal coating provided for use in a turbo machinery having a housing and a wheel having multiple blades. The housing houses the wheel which rotates therein. The seal coating is formed on the inner walls of housing adjacent where the wheel blades pass during their rotation. When the wheel is rotated such that, the blades contact the seal coating, it is abraded to form a close fit gap. The abradable seal coating preferably does not produce significant wear of the blade tips or transfer abradable material significantly to the blade tips upon being abraded.