Base Oil Market: Introduction
The global base oil market was valued over US$ 34.2 Bn in 2019 and is anticipated to expand at a CAGR of 1.78% during the forecast period. Among grades, the Group I segment accounted for a major share of the global base oil market in 2019. However, the demand for Group I base oil is likely to decline during the forecast period, owing to their replacement by Group II and Group III base oils. Group II base oils are capable of substituting Group I base oils in several industrial applications at minimal additional costs. Among applications, the automotive fluids segment held a significant share of the global base oil market in 2019. Asia Pacific is estimated to offer immense growth potential to the base oil market in the next few years.
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Key Drivers and Restraints of Base Oil Market
Rise in production and sale of automobiles is a major factor driving the global base oil market. Base oils are used as base fluids in the formulation of various types of lubricants. The automotive industry is a key end user of lubricants. The automotive industry employs lubricating products such as engine oils, transmission oils, and greases. Rapid increase in population and urbanization is leading to consistent rise in vehicle production across the globe. According to the International Organization of Motor Vehicle Manufacturers (OICA), sales of new vehicles increased from 87.5 million in 2013 to 95.05 million in 2018.
Increase in the need for emission control in various sectors, such as marine, and stringent norms to curb emissions of CO2, NOx, sulfur, and other particulate substances imposed by governments of various countries as well as the European Union have compelled oil companies to develop better methods of lubricant formulation. This has led to increase in the adoption of Group II, Group III, naphthenic, and blended base oils for production of lubricants. This factor promotes growth of the global base oil market.
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Asia Pacific a Highly Lucrative Region of Base Oil Market
Asia Pacific dominated the global base oil market in 2019. This trend is anticipated to continue during the forecast period. Rapid industrialization in China, India, and Indonesia is boosting the demand for base oil in industrial applications such as process oils, hydraulic oils, metalworking fluids, and white oils. This drives the base oil market in the region. Most companies across the globe are shifting their manufacturing bases toward India, Indonesia, and Vietnam, primarily due to availability of inexpensive labor and raw materials and supportive government regulations. This is augmenting the base oil market in these countries. Key players operating in the base oil market in Asia Pacific include China Petrochemical Corporation, PetroChina Company Limited, GS Caltex Corporation, Apar Industries Ltd., and SK Lubricants Co. Ltd.
Europe is another major region of the global base oil market. The market in the region is expected to expand at a significant pace during the forecast period. Rise in the demand for hybrid electric vehicles (HEVs) and electric vehicles (EVs) in order to comply with government regulations on CO2 emissions is also positively impacting the base oil market in Europe.
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Base Oil Market: Key Developments
In June 2019, Nynas AB launched process oils for use in low-temperature ink production and silicone fluid substitution. By introducing NYFLEX 2120B, a hydro-treated naphthenic oil with extremely low viscosity, the company offered a process oil ideal for use as a printing ink distillate in heat-set formulations as well as a reliable and cost-efficient alternative for traditional silicone fluids. In March 2018, Nynas AB launched a new product called NYNAS T 600, which is a highly refined naphthenic oil having viscosity of approximately 600 CST at 40°C. NYNAS T 600 is suitable for use in several industrial lubricant formulations such as gear oils, metal rolling, and metal forming.
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