Base Oil Market (2023 - 2030)

Base Oil Market Summary

The market is highly fragmented with presence of a large number of highly innovative players. The competition is intense as the participants engage in maintaining their customers to have a competitive edge over each other. Companies are adopting collaborative business strategy to increase their productivity, provide highly regarded products to consumers, and expand their regional presence.

Base Oil is critically utilized in the lubricant oil formulation globally with widespread application across a multitude of industries. Group I base oils are majorly utilized in marine lubricants which are widely utilized in the shipping industry to protect and enhance the efficiency of engines and equipment. These are high-performance marine lubricants that require high viscosity base oils, specially designed to enable optimal performance in operations.

Currently, the automotive sector is one of the major contributors to base oils globally. The demand for lubricants in manufacturing vehicles is expected to show continuity in its growth, however, the trend of electric vehicles has reduced the after sales growth for certain lubricants. Consumers are looking for standard and specialized products to satisfy specific requirements and thus lubricant manufacturers are investing in new product developments especially for the automotive industry. The growing consumption of lubricant manufacturers is anticipated to propel the demand for base oils over the forecast period.

Developing economies such as China, India, and Indonesia etc. are driving the manufacturing sector across the globe. According to World Bank, the value added of the manufacturing sector towards GDP was around 14% in 2021, an increased from the previous year. The growth is supported by the availability of raw material, reduced infrastructure cost, and labor cost. Owing to these factors base oil manufacturers are also shifting and expanding their production units in developing nations.

Product Insights

Group I product dominated the market with a revenue share of 42.5% in 2022. This is attributed to increase in usage in automotive, marine, and rail lubricants due to their affordability, simple processing, low volatility, high viscosity index, and lubrication properties. Group I product are classified as greater than 0.03% sulfur, less than 90% saturates, and viscosity range from 80 to 120. This group is characterized by its low aromatic compound content and paraffinic nature. The temperature range is from 32˚F to 150˚F. Compared to all other groups, group I are less refined and are a mixture of different hydrocarbon chains with little uniformity.

Group II product accounted for the second largest revenue share in the year 2021. This is because of its easy availability and new capacity additions near the countries in Asia Pacific and Middle East region coupled with competitive prices. Globally, over 90% volume of lubricants can be formulated from group II type. The prices of Group II type are close to that of group I, therefore, they have become common in the market.

Application Insights

The automotive oils application dominated the market with a revenue share of 42.8% in 2022. Its high share is attributable to increasing demand for greases, gear oil, engine oil, and others for lubricating the automobile components. Globally, truck engines and automobiles are the major consumers, consuming over 20 million tons of lubricants per year, accounting for about half of the total lubricant use. With vehicle manufacturers pushing toward meeting pollution standards, the automobile market is anticipated to prompt oil companies to produce base oils.

The demand for automobile oils is anticipated to witness noteworthy growth due to rising popularity of fragrance products for homes in developed economies such as Germany, the U.K., the U.S., and Canada. Blended, paraffin, beesbase, palm, and soy base oils are the most commonly purchased automobile oils in the market.

Process oil accounted for the second largest revenue share globally because of its application in a wide variety of technical and chemical industries either as an aid to processing or as a raw material. They play a vital role in several applications such as polymer industry, foam control, agriculture, sealants, leather goods manufacture, textile production, civil explosive production, and others.

Regional Insights

Asia Pacific region dominated the market with a revenue share of 49.8% in 2022. This is attributed to the presence of emerging economies and increasing disposable income of people in the region making it an attractive market for lubricant manufacturers. Asia Pacific is one of the largest product market globally, with China being the dominant country in the region.

China is projected to lead the Asia Pacific base oil market over the forecast period. The dominance is attributed to the increased use of automobiles and the rapid growth of manufacturing industry in the country. The market in China is also supported by the accessibility of raw materials, increased foreign investments, rapid industrialization, and a growing population. Similarly, the market in India is expected to witness a high growth rate owing to the strong presence of several base oil producers, and rapid infrastructure development undertaken by the government of India.

Europe attributed for the second largest revenue share globally for the year 2021. High consumption of lubricants is considered a key driver for the growth of the market in Europe, as lubricants are mainly composed of base oil. The high consumption of base oil is closely associated with the growth of the transportation and industrial sectors. In addition, the total number of passenger vehicles in use grew by 3.8%, and that of commercial vehicles grew by 3.7% from 2005 to 2015.

Key Companies & Market Share Insights

The global base oil market is fragmented in nature. The key industry participants have recognized the future growth prospects of base oil market across the world and as such, are constantly acquiring small- or medium-sized firms. They are merging with other companies for producing base oils in large volumes. These leading players are also introducing innovative products in the market. Such initiatives undertaken by the companies operating in the global base oil market are ensuring their stronghold in the market.

Several regional companies are enhancing their production capacity and entering into joint ventures with other companies to increase their global presence. Companies such as Exxon Mobil Corporation and ADNOC focus on expanding their production capacity and enhancing their market share through acquisitions and mergers. For instance, Exxon Mobil Corporation completed its expansion project of the Singapore refinery in August 2019. Some of the prominent players in the base oil market include:

• CNOOC Limited

• PetroCanada Lubricants Inc.

• Pertoleum & Chemical Corp. (SINOPEC)

• PETRONAS Lubricants International

• PT Pertamina (Persero)

• PetroChina Co., Ltd

• Exxon Mobil Corporation

• Abu Dhabi National Oil Company

• Chevron Corporation

• Shell plc

• Indian Oil Corporation Ltd

• BP p.l.c

• Saudi Arabian Oil Co.

• Sepahan Oil

• Bahrain Lube Base Oil Company

• LUKOIL

• SK Lubricants Co., Ltd.

• H&R OWS Chemie GmbH & Co. KG

• Bharat Petroleum Corporation Limited

• GS Caltex Corporation

• Neste

• Repsol

Base Oil Market